Treasury Bill Rates (T-Bill Rates) play a significant role in the Sri Lankan stock market by influencing investment decisions and company valuations. Here's how:

Impact on Investment Decisions:

• Competing Returns: T-Bills are considered risk-free investments backed by the government, offering a guaranteed return. When T-Bill rates rise, they become more attractive compared to the inherent risk associated with stocks. This can lead investors to shift their money from stocks to T-Bills, potentially reducing stock market liquidity and pushing stock prices down.

• Discount Rates: Investors use a concept called the "discount rate" to estimate the present value of a company's future earnings. A higher T-Bill rate translates to a higher discount rate. This means that the present value of a company's future earnings gets discounted more heavily, potentially leading to lower stock valuations.