364 day bill weighted average decreases for second consecutive week

• Bond yields decrease further ahead of monetary policy announcement

By Wealth Trust Securities

The market favourite 364 day bill weighted average yield decreased for a second consecutive week, recording a steep drop this time around at its auction conducted yesterday. It registered a drop of 12 basis points to 8.46% followed by the 91 day and 182 day bills by 01 and 07 basis points respectively to 7.41% and 7.99%. The exact offered amount of Rs. 29 billion was successfully accepted at the auction as the bids to offer ratio stood at a high of 3.29:1.  

The secondary bond market remained active yesterday as continued buying interest on the liquid maturities of 2021’s (i.e. 01.08.21 & 15.12.21), 15.03.22, 15.05.23, 2024’s (i.e. 01.01.24, 15.06.24 & 15.09.24) and 15.10.27 saw its yields dip to intraday lows of 8.67%, 8.70%, 8.93%, 9.25%, 9.45%, 9.46%, 9.45% and 9.70% respectively against its previous day’s closing level of 8.70/85, 8.80/95, 9.00/10, 9.27/35, 9.60/65, 9.63/68 each and 9.80/90. In addition, maturities of 01.08.24 and 15.03.25 changed hands at levels of 9.55% to 9.65% and 9.61% to 9.70% as well. In the secondary bill market, March 2020, August 2020, September 2020, October 2020, and February 2021 traded at levels of 7.14% to 7.20%, 8.00%, 8.00% to 8.02%, 8.20% and 8.37% respectively. 

This was ahead of today’s monetary policy announcement, the second for the year 2020, due at 7.30 a.m. The Central Bank of Sri Lanka cut its policy rates by 50 basis points each to 6.50% and 7.50% on its Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) respectively at its last announcement on 30 January.

The total secondary market Treasury bond/bill transacted volume for 3 March was Rs. 9.44 billion. 

In money markets, the overnight call money and repo rates averaged 6.95% and 7.02% respectively as the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen draining out an amount of Rs. 6.6 billion by way of an overnight Repo auction at a weighted average rate of 6.99%. It further drained out an amount of Rs. 2.9 billion by way of eight day Repo auction at a weighted rate of 7.11%, valued today. The overnight net liquidity surplus stood at Rs. 18.96 billion yesterday. 

Rupee appreciates marginally 

The USD/LKR rate on spot contracts appreciated marginally to close the day at levels of Rs. 182.00/05 against its previous day’s closing levels of Rs. 181.08/15 on the back of selling interest by banks.

The total USD/LKR traded volume for 3 March was $ 80.00 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month - 182.55/75; 3 months - 183.50/80 and 6 months - 184.95/25.