Auction yields hold ground; market kicks off with fresh buying

By First Capital Research

The Central Bank conducted its weekly T-bill auction yesterday, raising Rs.173.0 billion, in line with the initial offering, whilst of this, Rs.111.1 billion was raised via the 12-month T-bill. 

The weighted average yields for all three maturities remained unchanged at 7.65 percent (three-month), 7.98 percent (six-month) and 8.30 percent (12-month), respectively compared to the previous auction. 

Following the long holiday, the secondary market opened the week with renewed buying interest, marking a shift from the subdued sentiment of the previous week. Despite this pickup in activity, the yield curve remained unchanged, with trading volumes staying at moderate levels. Amongst the traded maturities, the 15.03.2028 and 01.05.2028 maturities traded between the rates of 9.80 percent and 9.70 percent whilst both 15.10.2028 and 15.12.2028 traded at the rates of 9.85 percent to 9.87 percent. 

Meanwhile, the 15.06.2029, 15.09.2029 and 15.12.2029 bond maturities traded between the rates of 10.25 percent and 10.15 percent. Additionally, the 15.03.2031 maturity changed hands at the rates of 10.68 percent to 10.65 percent.

In the forex market, the Sri Lankan rupee continued to appreciate against the greenback, closing at Rs.298.9/US dollar, compared to the previous day’s rate of Rs.299.3/US dollar. Meanwhile, overnight liquidity in the banking system contracted to Rs.183.1 billion, from Rs.194.5 billion in the previous session.