Foreign investor holdings of rupee-denominated government securities rose 1.31% week-on-week, continuing a gradual upward trend
Article Body
Foreign holdings of Sri Lankan rupee-denominated government securities rose 1.31% week-on-week to LKR 213.4 billion, as of September 18, continuing a gradual upward trajectory seen in recent weeks.
The increase comes even as domestic secondary market trading in government securities was described as thin, with activity concentrated in mid-tenor bonds. It also comes against a backdrop of rising yields across most of the curve, with government securities yields up between 18 and 55 basis points week-on-week, a dynamic that can make higher-yielding local debt more attractive to foreign holders.
Total outstanding government securities stood at LKR 18.71 trillion, comprising LKR 16.33 trillion in Treasury bonds and LKR 2.38 trillion in Treasury bills. Banking system liquidity expanded over the same period, rising to LKR 324.79 billion from LKR 317.84 billion.
The rupee, meanwhile, depreciated marginally against the US dollar, closing at LKR 332.13 compared to LKR 331.89 previously.
Business Impact
Sustained foreign participation in the government securities market is a factor in overall demand for local currency debt and can have a bearing on yield levels and, indirectly, on currency stability. Businesses and financial institutions monitoring capital flows may view continued foreign inflows into government securities as one indicator of investor sentiment toward the local fixed income market, though a single week’s movement should be read with caution rather than as confirmation of a sustained trend.
Key Numbers
| Metric | Value |
|---|---|
| Foreign holdings of GSec | LKR 213.4Bn |
| Weekly change | +1.31% |
| Total outstanding GSec | LKR 18.71Tn |
| T-Bonds outstanding | LKR 16.33Tn |
| T-Bills outstanding | LKR 2.38Tn |
| USD/LKR | 332.13 |
Source: Central Bank of Sri Lanka statistics and publicly available market information.