Bond yields fluctuate on the back of an active market

• Policy rates held steady

By Wealth Trust Securities

The secondary bond markets remained active yesterday as yields were seen fluctuating during the course of the day to end the day mostly unchanged against its previous days closings. Firstly, yields were seen increasing at the start of the trading day following the monitory policy announcement at where the Central Bank of Sri Lanka was seen holding its policy rates steady at 6.50% and 7.50%. 

Trading mainly centred on the liquid maturities of 2024s (i.e. 15.06.24 and 15.09.24) and 15.10.27 with its yields increasing to intraday highs of 9.70%, 9.68% and 9.85% respectively during morning hours of trading against its previous day’s closing levels of 9.50/55 and 9.52/55 each. Nevertheless, renewed buying interest from this point onwards resulted in yields decreasing once again with said maturities hitting intraday lows of 9.45%, 9.48% and 9.67% respectively.

In addition, maturities of 2021s (i.e. 01.08.21 and 15.12.21), 01.09.23, 2024s (i.e. 15.03.24 and 01.08.24), 15.03.25 and 15.06.27 changed hands at levels of 8.50% to 9.05%, 9.30%, 9.45% to 9.60%, 9.67% to 9.68% and 9.75% respectively as well.

The total secondary market Treasury bond/bill transacted volume for 4 March was Rs. 25.89 billion. 

In money markets, the overnight call money and repo rates averaged 6.97% and 7.02% respectively as the overnight net liquidity surplus in the system increased to Rs. 32.27 billion yesterday. The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka drained out an amount of Rs. 9.50 billion by way of an overnight Repo auction at a weighted average rate of 7.00%. Furthermore it drained out an amount of Rs. 1 billion by way of eight day Repo auction at a weighted rate of 7.15%.

Rupee appreciates further 

The USD/LKR rate on spot contracts appreciated further yesterday to close the day at levels of Rs. 181.85/90 against its previous day’s closing levels of Rs. 182.00/05 on the back of continued selling interest by banks.

The total USD/LKR traded volume for 4 March was $ 104.25 million.

Some of the forward USD/LKR rates that prevailed in the market were: one month – 182.40/60; three months – 183.35/65; and six months – 185.00/30.