Bond market activity remains sluggish

• Demand at weekly bill auction reduces 
• Foreign holding rupee bonds increase
• Rupee dips further
• Inflation continues to increase

By Wealth Trust Securities

The National Consumer Price Index (NCPI; Base 2013=100) for the month of September increased to a high of 73.7% on its point to point against its previous month’s figure of 70.2%. The annual average also increased to 36.9% against 25.5%.

The activity levels in the secondary bond market remained sluggish during the week as most market participants continued to be on the sidelines. The limited trades were witnessed on the maturities of 01.07.25, 15.01.28, 15.01.29 and 01.07.32 within the range of 31.93% to 32.25%, 30.90% to 31.00%, 30.91% to 31.05% and 29.47% to 29.90% respectively. Secondary market bill maturities of December 2022 and January-April 2023 changed hands at levels of 31.66% to 32.00% and 32.25% to 32.53% respectively as well.

The demand at the weekly Treasury bill auction was seen reducing to 55.74% of its total offered amount while the weighted average rates remained steady for the first time in six weeks. A total amount of Rs. 16.12 billion was accepted at the auction while a further amount of Rs. 25.68 billion was raised at its phase II.

The foreign holding in Rupee bonds increased once again, recording an inflow of Rs. 2.49 billion for the week ending 19 October 2022 while its overall holding stood at Rs. 25.08 billion.

The daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 8.42 billion. 

In money markets, the total outstanding liquidity deficit was registered at Rs. 501.17 billion by the end of the week against its previous weeks of Rs. 515.51 billion while the CBSL’s holding of Government Securities stood at Rs. 2,413.29 billion against its previous weeks of Rs. 2,383.84 billion. The weighted average rates on overnight call money and repo were at 15.50% each for the week.

USD/LKR

In the forex market, the middle rate for USD/LKR spot contracts depreciated further during the week to close the week at Rs. 363.38 against its previous weeks closing of Rs. 363.14.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 32.79 million. 

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)