Foreign investors shift to Treasury Bills; sell Bonds
Monday, 24 June 2013 02:04
REUTERS: Foreign investors have been shifting to Sri Lanka’s treasury bills while selling longer tenure T-bonds, the latest central bank data showed on Friday, as a rise in U.S. Treasury yields has prompted many offshore investors to rush to the exits.
Foreign investors bought a net Rs. 6.67 billion ($ 51.97 million) in T-bills in the three weeks ended on 19 June, while they sold a net Rs. 5.66 billion worth of T-bonds in the same period, the data showed.
Foreign holdings in T-bills rose 9.9% to $ 576.94 million and fell 1.3% in T-bonds to $ 3.31 billion in the same period, the data showed.
“Foreign investors are preparing to exit and that is the reason why they are now gradually shifting to short-term government securities,” a currency dealer said on condition of anonymity.
“For foreigners, Sri Lankan securities are still risky assets despite a return of well above 10%. With the U.S. Treasury yields rising, they want to exit from these markets.”
The Sri Lankan rupee sank to a more than six-month low on Friday for a second time in six sessions, with some foreign investors booking forwards to hedge their exposure, dealers said.
Central Bank Governor Ajith Nivard Cabraal, however, has said the fall in the currency is no cause for concern as foreign investors have been changing their positions rather than pulling out of the island nation’s bond market.