T-Bill rates hold broadly steady following Monetary Policy announcement

Thursday, 24 July 2025 00:12 - - {{hitsCtrl.values.hits}}

Secondary Bond market activity remains subdued
Rupee depreciates marginally

By Wealth Trust Securities

The weighted average yield rates at the weekly Treasury Bill auction held yesterday remained broadly stable, following two consecutive weeks of across-the-board increases. Accordingly, the weighted average rate on the 91-day tenor stayed flat at 7.62% and the 182-day tenor also remained unchanged at 7.91%. However, the weighted on 364-day tenor recorded a marginal decline of 1 basis point to 8.03%.

Nevertheless, the auction only raised 17.90% or Rs. 19.87 billion out of the total offered amount of Rs. 111 billion in successful bids. This was despite total bids received exceeding the offered amount by 1.65 times.

The Phase II subscription across all three tenors is now open until 3 p.m. of business day prior to settlement date (i.e., 24.07.2025) at the WAYRs determined for the said ISINs at the auction.

At the fourth Monetary Policy Review for 2025 announced yesterday, the Central Bank of Sri Lanka (CBSL) decided to hold the Overnight Policy Rate at 7.75%. This came following the 25 basis points cut delivered at the immediately previous Monetary Policy Review delivered on the 22 May. In addition, the Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR), which are linked to OPR with pre-determined margins of ± 50 basis points, also remained unchanged at 7.25% and 8.25%, respectively. The statutory reserve rate was left unchanged at 2.00%.

Activity in the secondary Government Securities market remained subdued, as the outcome of the Monetary Policy Review was largely anticipated and already priced in. Trading was limited to a few selected maturities, with yields holding broadly steady.

The 15.09.27 maturity was observed trading at the rate of 8.54%-8.55%. The 2028 tenors saw yields edge up slightly. The 01.07.28, 15.10.28 and 15.12.28 maturities were seen trading at the rates of 8.95%, 9.03% and 9.05% respectively. The 15.12.29 maturity was seen trading at the rate of 9.53%.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.79% and 7.82% respectively.

The net liquidity surplus was recorded at Rs. 93.53 billion yesterday. An amount of Rs. 5.95 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.25%, while an amount of Rs. 99.48 billion was deposited at Central Bank’s SDFR (Standard Deposit Facility Rate) of 7.25%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts depreciated to close at Rs. 301.80/301.85 as against its previous day’s closing level of Rs. 301.70/301.75.

The total USD/LKR traded volume for 22 July, was $ 70.10 million.

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

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