May 04, 2012 (LBO) – Sri Lanka’s overnight interest rate hovered nearer to a recently hiked policy rates Friday amid tighter liquidity, supporting its exchange rate and bond yields spiked, a day earlier, dealers said. A 2-year bond maturing on March 01, 2014 rose was quote around 12.75.13.00 percent.
A 4-year bond maturing on August 01, 2016 moved up to 13.10/13.50 percent lvels from 12.90/13.10 levels earlier.
Corrected – 3-year bond July 2015 Gilt-backed repos were quoted at 9.25/50 percent, still below the 9.75 percent policy reverse repo rate of the Central Bank but higher than the below 9.0 percent rates seen in April amid excess liquidity from money printed to pay state worker salaries.
Overnight call money rates were quoted at 10.00/25 percent for the giving support to the exchange rate. High short term rates, discourage the holding back of dollars by exporters as it is more profitable to hold rupee assets.
On Thursday excess liquidity in the banking system dropped to 4.9 billion rupees. The Central Bank’s Treasury bill stock was steady at 241 billion rupees against from 240 billion rupees a day earlier, after spiking from 233 billion rupees on April 30.
The spot US dollar was quoted around 126.50/127.50 rupees at opening.
On Thursday bond yields spiked with a 3-year bond maturing on July 2015 being traded as high as 13.20 percent up from 12.80/90 percent levels a day earlier, moving above 13.00 percent for the first time.