Foreign inflow into rupee treasuries gathers momentum

Monday, 31 July 2023 00:02 - - {{hitsCtrl.values.hits}}

Yield curve records a parallel shift down
Money market liquidity improves
Rupee depreciates marginally week on week

By Wealth Trust Securities

The foreign holding in rupee bills and bonds recorded a significant increase of Rs. 3.10 billion for the week ending 26 July. This is following a marginal increase of Rs. 334 million the previous week which broke the trend of three consecutive weeks of outflows. The total foreign holding stands at Rs. 182.46 billion.

The secondary bond market remained active during the week ending 28 July, as buying interest throughout the week led to yields decreasing across the yield curve to record a parallel shift down. The yields on the liquid maturities of 01.07.25, 15.05.26, 15.09.27, 01.05.28, 15.05.30 hit intraweek lows of 15.55%, 15.03%, 14.90%, 14.40%, 14.10% respectively against its weeks opening highs of 16.35%,15.80%, 15.60%, 15.75%, 15.05%.

Meanwhile, the weekly Treasury bill auction saw its weighted average rates marginally decreasing across the board. An amount of Rs. 160.5 billion was accepted in total against a total offered amount of Rs. 170 billion.

In money markets, the Domestic Operations Department (DOD) of Central Bank continued to inject liquidity during the week by way of overnight to seven-day Reverse repo auctions at weighted average yields ranging from 11.45% to 12.00% while the total outstanding liquidity deficit improved to Rs. 127.82 billion by the end of the week against its previous week’s of Rs. 137.83.

The Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,676.07 billion against its previous week’s of Rs. 2,677.28 billion.

In the forex market, the USD/LKR rate on spot contracts was seen depreciating marginally during the week to close the week at Rs. 328.00/329.00 against its previous week’s closing level of Rs. 326.75/328.00, subsequent to trading at a low of Rs. 329.00 and a high of Rs. 331.75. The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 46.54 million.

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