Bond yields increase marginally ahead of monetary policy announcement

• Money market liquidity dips to two-month low

 By Wealth Trust Securities

The secondary market bond yields were seen increasing marginally yesterday ahead of today’s monetary policy announcement, which is due at 7.30 a.m. 

The Central Bank of Sri Lanka last increased its policy rates by 25 basis points each at the monitory policy meeting held in March 2017.

Activity moderated during the day with the liquid maturities of 01.03.21, 01.05.21, 01.09.23, 01.08.25 and 01.08.26 hitting intraday highs of 9.85%, 9.84%, 10.08%, 10.25% and 10.21% respectively against its previous day’s closing levels 9.75/80, 9.78/85, 9.95/10, 10.18/25 and 10.15/22.

The total secondary market Treasury bond/bill transacted volumes for 22 September 2017 was Rs.5.24 billion.

In money markets, the net surplus liquidity in the system was seen dipping to a two-month low of Rs. 8.71 billion yesterday as the overnight call money and repo rate averaged 8.07% and 7.96% respectively. The OMO department of the Central Bank was seen draining out an amount of Rs.7.00 billion on an overnight basis by way of a repo auction at a weighted average of 7.25%. 

Rupee depreciates 

In the Forex market, the USD/LKR rate on the spot rate was seen depreciating marginally to close the day at Rs.152.95/05 against its previous day’s closing levels of Rs. 152.75/90.

The total USD/LKR traded volume for 22 September 2017 was $ 35.75 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 153.65/75; three months - 155.15/35 and six months - 157.25/45.