Money market shortfall decreases to over a one year low

• Bond market activity increases ahead of weekly T-bill auction
• Rupee steady

By Wealth Trust Securities

The overnight net liquidity shortfall in the money market was seen reducing to over a one year low of Rs. 154.64 billion yesterday, a level last seen on 29 October 2021. The shortfall peaked to Rs. 688.29 billion on 27 April 2022, leading to an accumulated decrease of Rs. 533.65 billion since then.

The amount deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 14.50% was Rs. 344.47 billion yesterday against an amount of Rs. 499.11 billion withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 15.50%. The weighted average rates on overnight Call money and Repo remained steady at 15.50% each.

Meanwhile, activity in the secondary bond market picked up yesterday, as the liquid maturities of 01.07.25, 15.01.28 and 01.07.32 changed hands at levels of 33.00%, 33.00% to 33.10% and 30.47% to 30.85% respectively. In addition, a considerable volume of December 2022 Treasury bills traded within the range of 29.00% to 29.25% as well.

The Treasury bill auction will see a total volume of Rs. 80 billion on offer, a decrease of Rs. 5 billion over its previous week’s total offered volume. This will consist of Rs. 30 billion on the 91-day maturity, Rs. 25 billion on the 182-day maturity and a further Rs. 25 billion on the 364-day maturity. At last week’s auction, a total amount of Rs. 84.52 billion was accepted at the auction while a further amount of Rs. 1.39 billion was raised at its phase II. The weighted average rate on the 91-day maturity increased by four basis points to 33.14% while on the 364 day it decreased by two basis points to 29.55%. The weighted average rate on the 182-day maturity remained steady at 32.53%.

The total secondary market Treasury bond/bill transacted volume for 14 November 2022 was Rs. 7 billion.   

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 14 November was $ 5.75 million.  

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