CBSL holds OPR unchanged at 8.75 percent

By First Capital Research 

Yesterday, the Central Bank of Sri Lanka (CBSL) announced its decision to keep the Overnight Policy Rate (OPR) unchanged at 8.75 percent. 

While the CBSL highlighted the adverse implications arising from the renewed geopolitical tensions, it noted that the monetary tightening implemented in May 2026, together with the subsequent anchoring of inflation expectations, would continue to transmit through the economy in the period ahead.

The secondary market remained subdued yesterday, with the yield curve broadly unchanged. Investor participation and trading volumes remained lacklustre, with trading interest largely confined to the short end of the yield curve. 

Consequently, the 15.10.2028 maturity was seen trading at 10.74 percent. In the 2029 segment, 15.06.2029 traded at 11.10 percent while 15.09.2029 and 15.10.2029 both traded higher at 11.25 percent. 

Moreover, the PDMO concluded its weekly T-bill auction, successfully raising the full initial offer of Rs.140.0 billion. The three-month and six-month bills raised Rs.61.5 billion and Rs.60.1 billion, respectively, both higher than the initial offer.  The 12-month bill raised Rs.18.4 billion, lower than the initial offer of Rs.30.0 billion. The weighted average yields of the three-month and six-month bills adjusted down by 18bps and 3bps, respectively to stand at 9.95 percent and 10.24 percent while that of the 12-month bill remained unchanged at 10.20 percent. 

On the external front, the Sri Lankan rupee slightly depreciated against the US dollar, standing at Rs.336.35/US dollar, compared to Rs.336.27/US dollar seen earlier. Overnight liquidity in the banking system expanded to Rs.175.20 billion, from Rs.162.36 billion recorded previously.