Bond yields decrease marginally ahead of monetary policy announcement

By Wealth Trust Securities

The renewed buying interest witnessed in the secondary bond market saw yields on the liquid maturities of 01.08.21, 15.12.23 and 15.06.27 decreasing marginally yesterday to intraday lows of 10.90%, 11.16% and 11.40% respectively as against its previous day’s closing levels of 10.97/05, 11.15/22 and 11.40/45 with activity increasing as well. In addition, the maturities of 01.05.20, two 2021’s (i.e. 01.03.21 and 15.12.21), 15.03.23, 01.01.24, 15.03.25, 01.08.26 and 01.09.28 were seen changing hands at levels of 10.80%, 10.90% to 10.97%, 11.00% to 11.05%, 11.20%, 11.25% to 11.28%, 11.30%, 11.34% and 11.45% respectively. In the secondary bill market, December 2018 maturities changed hands at 10.70% as well.

This was ahead of today’s monetary policy announcement, the first for the year 2019, due at 7.30 am. The Central Bank of Sri Lanka kept policy rates unchanged at its announcement on 28 December 2018.

The total secondary market Treasury bond/bill transacted volumes for 20 February was Rs. 4.09 billion.

In money markets, the overnight call money and repo rates averaged at 8.99% and 9.00% respectively as the OMO (Open Market Operations) Department of the Central Bank of Sri Lanka was seen injecting an amount of Rs. 45.00 billion on an overnight basis by way of a Reverse Repo auction at a weighted average of 8.95% yesterday. The net liquidity shortage stood at Rs. 85.43 billion.

Rupee continues to appreciate  

The rupee rate on its spot contract was seen appreciating further yesterday to close the day at Rs. 179.50/60 against its previous day’s closing level of Rs. 179.60/75 on the back of selling interest by banks.

The total USD/LKR traded volume for 20 February was $ 79.16 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month - 180.40/60; 3 months - 182.25/45 and 6 months - 185.25/40.