Sri Lanka Foreign Debt Holdings Break 2-Year High 📈

• Government Securities & Foreign Inflows: Foreign holdings in rupee-denominated Government securities surged to Rs. 154.02 Bn as of 5 February, the highest level since October 2023. This reflects a Rs. 7.46 Bn net inflow for the week and a massive 291% recovery from the 2024 low of Rs. 39.38 Bn. • Money Market & Liquidity: Inter-bank liquidity reached its highest point in nearly 11 years, hitting a surplus of Rs. 275.19 Bn. Weighted average rates for Call Money and Repo remained stable at 7.70% and 7.75%, respectively, aligning closely with policy rates. • Treasury Bill Auction: Rates declined for the third consecutive week: • 91-day: 7.80% (-4 bps) • 182-day: 8.17% (-9 bps) • 364-day: 8.33% (-3 bps) The auction raised Rs. 132 Bn in total, exceeding the initial Rs. 120 Bn target due to strong demand in the second phase. • Secondary Bond Market: A strong bullish rally saw yields drop across the curve. High liquidity prompted investors to move toward longer tenors (2029–2035). Market attention now shifts to a Rs. 51 Bn mini Bond auction scheduled for 12 February. • Currency (Forex): The USD/LKR spot rate saw a slight depreciation, closing at Rs. 309.37/42 compared to the previous week's Rs. 309.25/35. Average daily traded volume stood at $ 91.53 Mn.