364 day WAvg continues to drop driven by a further drop in money market rates

Thursday, 6 February 2014 00:00 - - {{hitsCtrl.values.hits}}

Despite rejecting bids for 91, 182 day T bills, CB raises Rs. 15.4 b

By Wealth Trust Securities

Despite all bids for the benchmark 91 day and 182 day Treasury bills being rejected for the first time in 12 and 18 weeks respectively at the weekly Treasury bill auction held yesterday, the Central Bank of Sri Lanka was successful in raising an additional amount of Rs. 3.4 billion over its initial total offered amount of Rs. 12 b due to the demand witnessed for the 364 day maturity. The weighted average (WAvg) of the 364 day maturity decreased by a further four basis points to 7.10% in comparison to its previous week’s WAvg. In line with the outcome of the auction, buying pressure on secondary market bills centering the 91 day, 182 day and 364 day maturities was evident as it was seen changing hands within the range of 6.50% to 6.60%, 6.75% to 6.85% and 7.00% to 7.10% respectively. However the yield curve continued to steepen, as selling interest on the liquid two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) saw it hit intraday highs of 9.33% and 9.35% respectively post auction against its opening lows of 9.18% and 9.25% to close the day at levels of 9.28/32 and 9.31/35. In money markets, overnight call money and repo rates declined sharply by 22 basis points (bp) and 35 bp respectively to average 6.64% and 6.09% yesterday in comparison to its Monday’s averages of 6.89% and 6.41% as surplus liquidity remained high at Rs. 97.46 billion. The Open Market Operations (OMO) department of Central Bank mopped up an amount of Rs. 49.20 b on a two day basis at a WAvg of 6.57%, while a further Rs. 48.26 b was deposited at CBSL’s Standing Deposit Facility Rate (SDFR) of 6.50%. Furthermore, the OMO department was seen conducting two term repo auctions for amounts of Rs. 20 b each for period of 29 days and 64 days while draining out an amount of Rs. 22.18 b in total at a WAvgs of 6.56% and 6.83% respectively. Rupee remains steady In Forex markets the USD/LKR rate remained steady for a second consecutive day to close the day at levels of Rs.130.64/67. The total USD/LKR traded volume for the previous day (3 February 2014) stood at US$ 64.35 million. Some of the forward dollar rates that prevailed in the market were: one month – 131.02; three months – 131.73; and six months – 133.06.