Signs of easing geopolitical tensions prompt cautious buying

By First Capital Research

As prospects of easing geopolitical tensions surfaced, a cautious buying stance dominated the market yesterday, despite some profit taking that was visible during the early hours of trading. 

The yield curve edged down in response while overall volumes remained moderate. Moreover, CBSL is set to publish its second Monetary Policy Review for 2026 early tomorrow, bringing much needed clarity amidst increasing economic uncertainty. 

At the short end of the curve, 15.02.2028 and 15.10.2028 traded at 9.50% and 9.70% respectively while 15.09.2029, 15.10.2029 and 15.12.2029 were seen trading between 9.75% to 9.85%. 

Moving ahead, 01.03.2030 was seen changing hands between 9.80% to 9.90% while 01.03.2031 traded at 9.90%. Finally, 15.12.2032 traded between 10.65% to 10.75% and 01.06.2033 changed hands at 10.90%. 

On the external front, the LKR depreciated against the USD, closing at Rs. 312.96/USD compared to Rs. 311.75/USD recorded previously. Liquidity in the banking system expanded marginally to Rs. 309.7bn from Rs. 308.3bn recorded previously.