Sri Lanka rupee appreciates against US dollar

Throughout the week that concluded yesterday, subdued sentiment was dominant as investors remained on the sidelines due to uncertainties surrounding the upcoming budget and the IMF’s second review, a report issued by First Capital Research pointed out.

“Hence, the secondary market yields remained broadly stable. However, weighted average yields at the weekly T-Bill auction trimmed down across the board, whilst 1 year T-Bill dropped below 13.00% mark since April 2022,” they said.

“The secondary market displayed a dull performance during the week as investor interest was seen to be toned down while activities were limited. As the week progressed, selling interest emerged on the short to mid-end of the curve. Amongst the traded maturities, 2025 and 2026 tenors hovered in the range of 14.90%-14.95% and 15.10%-15.20%, respectively. On the mid to long tenors, mixed activity was evident on 15.07.29 and 15.05.30 maturities between 14.40%-14.30%.

The report further said:

The Central bank of Sri Lanka (CBSL ) conducted its weekly T-Bill auction, expecting to raise LKR 165.0Bn, but however, the auction was slightly undersubscribed despite 03M and 06M gaining an over subscription while 1Yr bill only enticed an acceptance of LKR 2.4Bn out of the total offered LKR 30.0Bn.

Moreover, weighted average yield rates pared-down on a moderate level with 03M maturity closing at 15.64% (-29bps) and 06M closing at 14.81% (-12bps). However, 1Yr bill declined marginally by only 3bps to and 12.99%.

CBSL also has announced a T-Bond auction worth LKR 250.0Bn which is scheduled to take place on 13th Nov-23. Accordingly, LKR 60.0Bn is to be raised from 15.01.2027 maturity while LKR 110.0Bn and LKR 80.0Bn is expected to be raised from 15.03.2028 and 15.03.2031 maturities, respectively. In the Forex market, LKR appreciated against the USD with rupee being recorded at LKR 327.1 compared to LKR 328.0 recorded during the beginning of the week.