Monday Aug 24, 2026
Monday Aug 24, 2026
Monday, 24 August 2026 04:56 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
Foreign investor appetite for rupee-denominated Government securities remained strong, with the market recording a net inflow of Rs. 8.30 billion during the week ended 20 August. This marked the eleventh consecutive week of net foreign inflows, lifting total foreign holdings of rupee Treasuries to Rs. 202.51 billion, their highest level in almost eight years since November 2018.
Furthermore, the rupee or the USD/LKR rate was seen appreciating to below Rs. 330 for the first time since 26 May, to close the week ending 21 August at Rs 329.40/329.50 as against its previous week’s closing of Rs. 332.80/332.90. Intraweek the rupee strengthened to a high of Rs. 329.35 from a low of Rs. 332.80.
The average daily USD/LKR traded volume over the first four trading days of the week stood at $ 109.51 million.
Meanwhile, the secondary Bond market closed last week on a broadly positive footing, with sustained buying interest supporting a downward bias in yields across several segments of the curve. Market sentiment remained constructive despite intermittent profit-taking following the recent extended rally, with selling pressure largely absorbed by underlying demand, including continued foreign portfolio interest.
The stronger tone was most evident across selected maturities in the belly and longer end of the curve. Yields on the 2032, 2033, 2036 and 2037 maturities declined, week-on-week, while the 2027 and 2028 maturities also recorded declines.
While performance across the bulk of the curve remained positive, some mixed performance was observed, with selected 2030–2031 and 2034–2035 maturities closing modestly higher. Nevertheless, the broader market remained well supported. Healthy transaction volumes and sustained demand from large-volume buyers reinforced market depth, allowing the market to absorb profit-taking pressure while maintaining its underlying positive momentum.
Consequently, secondary market Bond yields closed lower on a week-on-week basis on a majority of the yield curve with selected tenors exhibiting mixed performance.
The 15.02.28 and 15.03.28 traded at yields of around 10.00%-10.05%, while the 01.05.28 traded at 10.05%. The 15.12.29 saw yields decline from an intraweek high of 10.62% to a low of 10.55%, while the 15.10.29 traded down to 10.50%.
The 2030 tenors saw mixed activity during the week. The 15.05.30 traded within the range of 10.80%-10.70%, while the 01.08.30 traded within a relatively narrow range of 10.85%-10.80%. The 15.10.30 traded down from an intraweek high of 10.90% to a low of 10.80%, while the 01.02.31 traded down from 11.00% to 10.95%.
Buying interest was more pronounced further along the curve. The 15.12.32 rallied from an intraweek high of 11.40% to a low of 11.25%, while the 01.10.32 traded down to 11.20%. The 15.01.33 traded at 11.40%-11.30%, while the 01.11.33 traded down from an intraweek high of 11.60% to a low of 11.45%.
The 15.10.34 saw two-way movements during the week, trading within a range of 11.95%-11.68%.
On the longer end, sustained buying interest drove yields lower. The 15.08.36 traded down from an intraweek high of 12.08% to a low of 12.00%, while the 01.07.37 declined from an intraweek high of 12.20% to a low of 12.00%.
At last week’s Treasury Bill auction, yields extended their decline, marking a sixth consecutive week of declines as strong demand continued to drive yields lower across all three tenors.
The 91-day yield fell 22 basis points to 9.22%, while the 182-day and 364-day yields declined 18 and 10 basis points to 9.60% and 9.91%, respectively. This pushed the one-year yield below 10.00% for the first time in 12 weeks.
The Public Debt Management Office (PDMO) raised the full Rs. 140 billion
offered across all three tenors. Total bids amounted to 2.67 times the offer, reflecting strong demand for short-term Government securities.
Demand extended into the second phase with the full Rs. 14 billion offered being taken up against a total market subscription of a staggering Rs. 88.29 billion. Accordingly, the aggregate accepted amount stood at Rs. 154 billion.
Money market liquidity continued to be robust, with the outstanding system liquidity remaining close to the Rs. 300 billion mark at Rs. 278.51 billion as against Rs. 290.69 billion a week earlier. The weighted average Call Money and Repo rates stood at 8.81% and 8.86%, respectively.
(References: Public Debt Management Office - Ministry of Finance, Central Bank of Sri Lanka, Bloomberg E-Bond Trading Platform, Money Broking Companies)
