Positive start to new trading week, Bond yields nosedive, Rupee appreciates

By Wealth Trust Securities

The secondary market bond yields plummeted yesterday despite the policy rate hike on the back of positive developments with regard to the IMF Extended Fund Facility (EFF) to Sri Lanka. 

Morning hours of trading saw buying interest on the liquid 01.07.25, 15.05.26 and 15.09.27 maturities, to hit intraday lows of 31.40%, 27.95% and 27.00% respectively against its previous day’s closing levels of 32.00/33.00, 29.00/30.00 and 28.25/29.25. However selling interest toward the end of the day on the back of profit taking curtailed the downward trend. 

This was ahead of today’s weekly Treasury bill auction, where a total amount of Rs. 85 billion is on offer. This will consist of Rs. 45 billion on the 91-day maturity and Rs. 20 billion each on the 182-day and 364-day maturities. 

At last week’s auction, the weighted average on the 91-day decreased by 13 basis points to 29.59% while the weighted average rates on the 182-day and 364-day maturities decreased by 03 basis points each to 28.64% and 27.64% respectively. An amount of Rs. 106.25 billion was accepted in total against its total offered amount of Rs. 85 billion.

The total secondary market Treasury bond/bill transacted volume for 3rd March 2023 was Rs. 19.40 billion.   

In money markets, the base rate increase resulted in weighted average rates on overnight call money and repo increasing to 16.46% and 16.50% respectively while an amount of Rs. 119.23 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 16.50%.

Forex Market 

In the Forex market, the USD/LKR or rupee appreciated once again as its cash and spot contracts were traded within the range of Rs. 321 to Rs. 335 yesterday subsequent to the band been removed against its Fridays close of Rs. 336.17. 

The total USD/LKR traded volume for 3rd March was $ 84.45 million.  

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