Monday Aug 10, 2026
Monday Aug 10, 2026
Monday, 10 August 2026 00:00 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
Money market liquidity strengthened considerably last week, with the outstanding system liquidity surplus rising to Rs. 246.81 billion by the close, from Rs. 183.34 billion a week earlier.
Liquidity was seen hitting its highest level since May this year. The sizeable build-up in excess liquidity exerted further downward pressure on short-term money market rates, with the weighted average Call Money and Repo rates easing to 8.93% and 8.97%, respectively, from 9.01% and 9.03% in the preceding week.
The decline in overnight rates remained consistent with the prevailing surplus liquidity conditions across the domestic money market. Coupled with the expectation of lower T-Bill auction yields, the easing of overnight rates supported the decline in T-Bill yields and T-Bond yields as funding costs declined and the short end provided a positive anchor for long end of the curve.
Meanwhile, foreign investor appetite for rupee-denominated Government securities remained robust, with the market recording a net inflow of Rs. 4.04 billion during the week ended 6 August.
This marked the ninth consecutive week of net foreign buying and pushed total foreign holdings of rupee Treasuries to Rs. 192.86 billion. Notably, the stock of foreign holdings surpassed the Rs. 190 billion for the first time in more than three years, reaching its highest level since June 2023 and extending the steady accumulation observed in recent weeks.
Against this backdrop the secondary Bond market extended its recent rally last week, with yields moving lower across much of the curve. Although selling interest prompted a brief reversal on selected maturities early in the week, the market subsequently regained a firmer footing.
The positive momentum gathered pace mid-week as increasingly aggressive buying interest drove yields lower amid expectations of a decline in Treasury Bill auction averages. The subsequent drop in weighted average yields at Wednesday’s Treasury Bill auction reinforced the positive momentum. Thereafter, the market consolidated its gains, with a slight downward bias at the long end.
Towards the close of the week, persistently robust money market liquidity provided a further impetus, with the decline in yields becoming more pronounced at the short end of the curve. Consequently, secondary market yields and two-way quotes closed lower on a week-on-week basis, while overall activity and transaction volumes remained strong.
In the secondary Bond market, the 2028 tenors traded down from an intraweek high of 10.50% to a low of 10.40%.
Moving into the 2029 segment, the 15.10.29 and 15.12.29 traded down the ranges of 10.95%-10.80% and 11.00%-10.85% respectively.
In the 2030 space, the 01.03.30 and 15.05.30 traded down from intraweek highs to lows of 11.20%–11.00% and 11.25%–11.15% respectively. The 01.08.30 and 15.10.30 traded down from intraweek highs of 11.45% and 11.47% to lows of 11.25% and 11.30% respectively.
The 01.02.31 traded down from an intraweek high of 11.60% to a low of 11.38%, while the 15.05.31 changed hands at 11.55%. The 15.12.32 traded down from 11.85% to 11.75%, while the 15.01.33 traded down from12.05% to 11.90% and the 01.11.33 changed hands at 12.00%.
Further along the curve, the 15.10.34 traded down from an intraweek high of 12.30% to a low of 12.10%. The 15.08.36 traded down from 12.65% to 12.60%, while the 01.07.37 traded down from an intraweek high of 12.82% to a low of 12.64%.
At the weekly Treasury Bill auction held last Wednesday, the weighted average yields dropped for the fourth consecutive week. Accordingly, the yield on the 91-day tenor declined by 9 basis points to 9.77% and the 182-day maturity by a steep 22 basis points to 9.99% and the 364-day maturity notched lower by 01 basis point to 10.19%.
The auction successfully raised the full Rs. 140 billion offered at the first phase of competitive bidding. Maturity-wise, the shorter tenors raised more than or equal to their respective amounts offered, while less than the amount offered was accepted for the 1-year tenor. The bids received exceeded the offered amount by 2.41 times.
Demand extended into the second phase with the full Rs. 14 billion offered being taken up against a total market subscription of Rs. 58.57 billion. Accordingly, the aggregate accepted amount stood at Rs. 154,000 million. This subsequently sparked a rally in the secondary T-Bill market which saw maturities trade below their respective weighted averages.
Forex market
In the forex market, the USD/LKR rate on spot contracts closed the week appreciating to Rs. 335.37/335.42 as against its previous week’s closing of Rs. 335.65/335.80. Intraweek the rupee strengthened to a high of Rs. 335.40 and a low of Rs. 335.80.
The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 113.82 million.
(References: Public Debt Management Office - Ministry of Finance, Central Bank of Sri Lanka, Bloomberg E-Bond Trading Platform, Money Broking Companies)
