Secondary Bond market activity remains dull; rates pick up

Friday, 29 August 2025 04:09 - - {{hitsCtrl.values.hits}}

Analysts predict: CCPI inflation likely made a comeback in August
Rupee appreciates marginally

By Wealth Trust Securities

The secondary Bond market yesterday saw activity and transaction volumes at subdued levels for a fourth straight day. Sparse trades were observed on thin volumes focused on selected maturities, while the market was at a virtual standstill for much of the day. With little in the way of fresh signals to drive sentiment, most participants continued to adopt a cautious, wait-and-see approach. However, yields were seen edging up following the recent period of stagnation and consolidation. As a result, secondary Bond market two-way quotes closed higher as compared to the day prior.

The 01.08.26 and 15.12.26 maturities were seen trading at the rates of 8.10%-8.12% and 8.20% respectively. The 15.02.28 and 01.05.28 maturities were seen trading at the rates of 8.80% and 8.85% respectively. The 15.12.28 maturity changed hands at the rate of 9.00%. The 15.09.29, 15.10.29 and 15.12.29 maturities changed hands collectively at the rates of 9.45%-9.47%. The 15.12.32 maturity at the rates of 10.34%-10.30%.

In an article titled “SRI LANKA PREVIEW: Inflation Likely Returned Due to Food Prices”, Bloomberg Intelligence opined the following: Sri Lanka is predicted to have exited its deflationary spell in August, largely on the back of rising food and core prices. Headline inflation is projected at 1.1% year-on-year, reversing the 0.3% contraction seen in July and marking the end of nearly a year of deflation that began in September 2024. Food prices are estimated to have risen 2.6% compared to 1.5% in the previous month, while core inflation likely picked up to 2.4% from 1.6%, reflecting strengthening demand conditions. Official inflation data is scheduled for release today.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.86% and 7.87% respectively.

The net liquidity surplus was recorded at Rs. 143 billion yesterday, deposited at the Central Bank’s SDFR (Standard Deposit Facility Rate) of 7.25%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts to closed appreciating marginally to Rs. 302.38/302.45 as against its previous day’s closing level of Rs. 302.42/302.52.

The total USD/LKR traded volume for 27 August was $ 80.85 million.

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