Market interest rates further decline

In line with the gradual easing of the monetary policy stance by the Central Bank, interest rates have been on a declining trend since the beginning of this year, said Central Bank media release.

This was bolstered by improved market confidence and investor sentiment with the ending of the conflict, which resulted in an inflow of foreign investment to government securities. This trend was underscored by the new developments in relation to the financing facility by the IMF, media release said.

Accordingly, yield rates on Treasury bills declined sharply at the Treasury bill auction held on July 22 reflecting market confidence and positive sentiment. The yield rate on Treasury Bills with a maturity of 91 days declined by 26 basis points to 10.79 per cent, the lowest since early October 2006. This trend was reflected in the yield rates of Treasury Bills with the maturities of 182 days and 364 days.

A similar trend was observed in the yield rates of Treasury Bonds in the secondary market as well. The total reduction in Treasury Bills thus far during the year is in the range of 654-699 basis points.

The average weighted call money rate has also continued to be within the policy rate corridor at a single digit level benefiting from a healthy liquidity position maintained in the market. The present levels of call money rates are the lowest observed since the first quarter of 2006, media release said .