Buying interest persists amidst positive sentiment

By First Capital Research
The secondary market yield curve experienced continued buying interest fuelled by positive sentiment surrounding new government policies as uncertainty amongst investors diminished post-election.
The market encountered slight selling interest following the Monetary Policy review announced on September 27, 2024, where the Central Bank decided to maintain the Standing Deposit Facility Rate and Standing Lending Facility Rate of the Central Bank at their current levels of 8.2 percent and 9.25 percent, respectively. 
Notable trades were amongst the short to mid-end of the curve, primarily amongst the 2027, 2028 and 2029 maturities. On the short-end of the curve, 01.05.27 and 15.12.27 traded between rates of 11.90 percent - 11.50 percent.  Meanwhile, on the belly end of the curve, 15.02.28, 15.03.28 and 01.07.28, traded between the rates of 12.25 percent - 11.80 percent. Similarly, 15.06.29 and 15.09.29 traded between the rates of 12.35 percent - 12.00 percent. Increased buying interest from foreign investors was displayed in the 15.05.30 maturity, trading between the rates of 12.45 percent - 12.00 percent. Additionally, the six-month bill experienced some buying interest, trading at a rate of 10.30 percent.
On the external front, the Sri Lankan rupee appreciated against the US dollar, closing at Rs.300.22 per US dollar, compared to Rs.301.76 per US dollar recorded the previous day. 
Meanwhile, the Central Bank holdings of government securities remained unchanged, closing at Rs.2,515.62 billion yesterday. Overnight liquidity in the banking system expanded to Rs.102.43 billion, from Rs.82.96 billion recorded the previous day.