364 day bill weighted average increase for third consecutive week

• Overnight money market liquidity increase to a four-month high

By Wealth Trust Securities

The 364 day bill weighted average was seen increasing further for a third consecutive week at its weekly Treasury bill auction held yesterday, registering an increase of 05 basis points to 8.41%. Interestingly, the total offered amount of Rs. 8.5 billion was only accepted on the 364 day maturity, rejecting all bids for the 91 day and 182 day maturities. The bids to offer ratio increased to a ten week high of 3.37:1.  

The secondary bond market became active yesterday as renewed buying interest leading to the auction mainly on the liquid maturities of two 2021’s (i.e. 15.10.21 & 15.12.21), 15.07.23, 2024’s (i.e. 15.06.24 & 15.09.24) and 15.09.34 saw its yields dip to intraday lows of 9.00% each, 9.91%, 10.25%, 10.32% and 10.90% respectively against its previous day’s closing levels of 9.00/10, 9.00/15, 9.90/00, 10.28/32, 10.35/40 and 10.95/00. However, following the auction outcome the downward trend in yields was seen halting. In addition, the 15.06.27 maturity was seen changing hands within the range of 10.69% to 10.75% as well. In the secondary bill market, March, August and September 2019 maturities changed hands at levels of 7.95% to 8.00%, 8.25% and 8.33% respectively, pre-auction. 

The total secondary market Treasury bond/bill transacted volumes for 17 September was Rs. 9.38 billion. 

In money markets yesterday, overnight call money and repo rates averaged 7.45% and 7.58% respectively as the overnight net liquidity surplus in the system increased to a four-month high of Rs. 59.93 billion. The Open Market Operations (OMO) Department of the Central Bank of Sri Lanka injected an amount of Rs. 1.8 billion on an overnight basis by way of a Reverse Repo auction at weighted average rates of 7.45%. It further injected an amount of Rs. 5.0 billion for Standalone Primary Dealers by way of an overnight reverse repo auction at a weighted average rate of 7.57%.

Rupee dips further

The USD/LKR rate on spot contracts was seen depreciating further yesterday to close the day at Rs. 180.70/80 against its previous day’s closing of Rs. 180.55/65 on the back of continued buying interest by banks.

The total USD/LKR traded volume for 17 September was $ 55.51 million.

Some forward USD/LKR rates that prevailed in the market: 1 month - 181.20/40; 3 months - 182.20/50; 6 months - 183.90/20.