Bond market yields steady ahead of monetary policy announcement

Tuesday, 26 March 2024 00:42 - - {{hitsCtrl.values.hits}}

Rupee continues to advance

By Wealth Trust Securities

The secondary bond market commenced the week with subdued activity and yields holding steady ahead of the upcoming monetary policy announcement. Market participants were seen adopting a wait-and-see approach with the market trading sideways, fluctuating within a narrow band. Limited trades were only observed on the 2028 tenors (15.03.28, 01.07.28 and 15.12.28) within the range of 12.09% to 12.12%.

Today will see the 2nd monetary policy announcement for the year 2024. For context, at the last announcement on 23 January 2024 (the 1st for the year) the monetary policy interest rates were left unchanged. Accordingly, the Standing Deposit Facility Rate (SDFR) remained at 9.00% and the Standing Lending Facility Rate (SLFR) at 10.00%. This decision followed policy rates being slashed a cumulative 650 basis points from the June of 2023.

The total secondary market Treasury bond/bill transacted volume for 22 March was Rs. 18.95 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.17% and 9.37% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight and 7-day reverse repo auction for Rs. 28.20 billion and Rs. 45.55 billion at the weighted average rates of 9.09% and 9.23% respectively.

The net liquidity deficit stood at Rs. 16.77 billion yesterday as an amount of Rs. 6.01 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10.00% against an amount of Rs. 62.99 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 9.00%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day up at Rs. 302.60/302.70 against its previous day’s closing level of Rs. 303.40/303.50. The total USD/LKR traded volume for 22 March was $ 115.27 million.

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