By Paneetha Ameresekere
Ceylon Finance Today: The higher rates accepted for Treasury (T) Bonds of 2017 and 2019 maturities at yesterday's (Tuesday, 17 March) primary auction is an indication that the market may expect a rate increase in Central Bank of Sri Lanka's (CBSL's) key, standing deposit facility rate (SDFR) at today's (Wednesday's) monetary policy statement for the current month, market sources told Ceylon FT.
Ceylon Finance Today: The higher rates accepted for Treasury (T) Bonds of 2017 and 2019 maturities at yesterday's (Tuesday, 17 March) primary auction is an indication that the market may expect a rate increase in Central Bank of Sri Lanka's (CBSL's) key, standing deposit facility rate (SDFR) at today's (Wednesday's) monetary policy statement for the current month, market sources told Ceylon FT.
"With deposit rates for senior citizens fixed at a mandatorily higher15% rate, we expect CBSL to announce a 50 basis point (bp) (1/2%) increase in CBSL's SDFR to 7% at today's monetary policy statement," the sources said. CBSL last changed its SDFR rate 18 months ago when it was reduced by 50 bps to 6.5% in October 2013.
Meanwhile, CBSL's standing lending facility rate is 8%.
Meanwhile, CBSL's standing lending facility rate is 8%.
Yesterday's primary T Bond auction saw the 15 September, 2019 maturity fetching a weighted average yield (WAY) of 9.13% and that of the 1August 2021 maturity 9.55%, though, after the auction, those yields were trading a few bps lower than their auction price in secondary market trading, sources said.
In related developments, the weighted average rate (WAR) of overnight market repo transactions increased by 15 bps to 6.76%, though the WAR of call money remained unchanged at 6.70%, yesterday.
In related developments, the weighted average rate (WAR) of overnight market repo transactions increased by 15 bps to 6.76%, though the WAR of call money remained unchanged at 6.70%, yesterday.
In the meantime, in the foreign exchange (FX) market, movements were little changed, over that of the previous day Monday's developments at yesterday's trading, the sources said. Volumes were thin, with the market adopting a 'wait and see' attitude, they said.
On Monday, 16 March, trading in the FX market was executed on two weeks forwards at Rs 133.80/134.00 to the US dollar in two way quotes in interbank trading. Spot was being controlled at Rs 132.90 to the dollar, while trading in one week's forwards was done at Rs 133.60.
On Monday, 16 March, trading in the FX market was executed on two weeks forwards at Rs 133.80/134.00 to the US dollar in two way quotes in interbank trading. Spot was being controlled at Rs 132.90 to the dollar, while trading in one week's forwards was done at Rs 133.60.
Meanwhile, statistics showed that another US$ 106.8 million was spent from CBSL's foreign reserves to defend the rupee at yesterday's trading. As a result, market's excess liquidity declined from Rs 88.3 billion to Rs 49.3 billion yesterday.
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