Bond yields dip following policy announcement

Friday, 15 October 2021 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The Central Bank of Sri Lanka was seen holding its policy rates on its Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) steady at 5.00% and 6.00% respectively at its monetory policy announcement yesterday.

The secondary bond market yields were seen decreasing yesterday mainly during early hours of trading subsequent to the monetary policy announcement while activity increased. The yields on the liquid maturities of 15.12.23, 01.12.24 and 15.01.27 were seen decreasing to intraday lows of 9.25%, 9.70% and 11.25% respectively against its previous day’s closing levels of 9.40/75, 9.50/50 and 11.30/75.

However, selling interest at these levels curtailed any further downward movement with yields closing marginally higher. In secondary bills, December 2021 and January 2022 bill maturities changed hands at lows of 7.20% and 7.60% respectively.

The total secondary market Treasury bond/bill transacted volume for 13 October was Rs. 49.84 billion.

In money markets, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen draining out amounts of Rs. 4.00 billion and Rs. 3.00 billion by way of four day and seven day repo auctions respectively at a weighted average rate of 5.99% each. Furthermore, it drained out an amount of Rs.7 billion on a 14 day basis at a weighted average rate of 6.05%, valued today.

The net liquidity deficit decreased to Rs. 34.80 billion yesterday as an amount of Rs. 106.02 billion was deposited at Central Banks SDFR of 5.00% against an amount of Rs. 147.82 billion withdrawn from Central Banks SLFR of 6.00%. The weighted average rates on overnight call money and REPO remained steady at 5.92% and 5.93% respectively.

USD/LKR

The forex market remained inactive yesterday.

The total USD/LKR traded volume for 13 October was $ 39.00 million.

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