Bond market remains active

Monday, 24 July 2023 02:22 - - {{hitsCtrl.values.hits}}

Marginal foreign inflow for the first time in 4 weeks
Rupee depreciates further
Inflation drops to 10%

By Wealth Trust Securities

The National Consumer Price Index -NCPI (Base;2021=100) or National inflation for the month of June decreased sharply to 10.8% on its point to point as against 22.1% recorded in May and 53.6% in February. This is the lowest level witnessed in the NCPI since the index was rebased, at the start of 2023, so far.

The secondary bond market remained active during the week ending 21 July despite the weekly Treasury bill auction weighted average rates increasing across the board for a second consecutive week where only an amount of Rs.75.51 billion was accepted in total against a total offered amount of Rs. 160 billion.

The bond market activity was witnessed mainly on the liquid maturities of 01.07.25, 15.05.26, two 2027’s (i.e 01.05.27 & 15.09.27), 01.05.28, 15.05.30 and 01.07.32 at levels of 15.75% to 16.25%, 15.40% to 15.60%, 15.00% to 15.65%, 15.07% to 15.15%, 14.80% to 15.08% and 14.40% to 14.60% respectively.

The foreign holding in rupee bonds recorded a marginal increase of Rs. 334.30 million for the week ending 20 July, breaking the trend of a prior 3 consecutive weeks of foreign net outflows, while the daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 27.74 billion.

In money markets, the Domestic Operations Department (DOD) of Central Bank continued to inject liquidity during the week by way of overnight to 7-day Reverse repo auctions at weighted average yields ranging from 11.60% to 12.00% as the total outstanding liquidity deficit was recorded at Rs. 137.83 billion by the end of the week.

The Central Bank of Sri Lanka’s (CBSL) holding of Gov. Security’s was registered at Rs. 2,677.28 billion against its previous weeks of Rs. 2,539.09 billion.

In the Forex market, the USD/LKR rate on spot contracts was seen depreciating further during the week to close the week at Rs. 326.75/328.00 against its previous weeks closing level of Rs. 319.50/321.00, subsequent to trading at a low of Rs. 322.00 and a high of Rs. 326.75.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 46.29 million.

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