Bond yields increase following monetary policy announcement

By Wealth Trust Securities

The secondary bond market yields were seen increasing yesterday following the eighth monetary policy announcement, at where policy rates were kept unchanged at 14.50% and 15.50% on the Standing Deposit Facility Rate (SLDR) and Standing Lending Facility Rate (SLFR) respectively.

In morning hours of trading, selling interest on the 01.07.25 and 01.07.32 maturities saw its yields increase to intraday highs of 31.50% and 29.49% respectively against its previous day’s closing levels on 30.90/20 and 28.00/50. 

Nevertheless, buying interest at these levels saw yields pull back once again as the 01.07.25 dipped to 31.25%. In the secondary bill market, November and December 2022 along with February 2023 maturities traded at levels of 29.26% to 30.00% and 32.80% to 33.15% respectively.

The total secondary market Treasury bond/bill transacted volume for 23 November 2022 was Rs. 42.07 billion.   

In money markets, the net liquidity deficit stood at Rs. 154.34 billion yesterday as an amount of Rs. 328.76 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 14.50% against an amount of Rs. 483.10 billion withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 15.50%. The weighted average rate on overnight repo was registered at 15.50% while no transactions were report on overnight Call money.

Forex Market 

In the Forex market, the middle rate for USD/LKR spot contracts remained steady at Rs. 363.50 yesterday.

The total USD/LKR traded volume for 23 November was $ 41.45 million.  

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)