“CBSL stance on policy rates unchanged; current levels to be maintained”

Secondary market yield curve budged lower notably as buying interest strengthened over the week predominantly on mid-long tenor maturities as investor confidence improved, says First Capital Research.

The Monetary Board of the Central Bank of Sri Lanka, at its final review meeting for the year which was held on November 23, decided to maintain the Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 14.50% and 15.50%, respectively. Meanwhile, in the secondary market buying interest was largely witnessed during the week possibly due to the improvement in banking system liquidity and speculations on a policy rate easing. Moreover, positive comments from the President with regards to domestic debt restructuring further boosted investor confidence. Accordingly, 2025, 2028 and 2032 maturities actively traded resulting in a plunge in yields.

At the primary T-Bill auction, 93.6% of the total offered amount of Rs 80.0 billion was accepted with weighted average yields of 91 days, 182 days and 364 days T-Bills recording at 32.92% (-14bps), 32.45% (-6bps) and 29.52% (-1bps), respectively.

The Government Securities market has to settle a Treasury bill maturity amounting to Rs. 142 billion and T-Bond interest amounting to Rs. 23.1 billion for the week ending December 2.

In the forex market, rupee was held steady against the greenback with the rupee recording at 363.5 per USD throughout the week.