Bond yields increase marginally ahead of monetary policy announcement

By Wealth Trust Securities

Renewed selling interest witnessed in the secondary bond market saw yields on the liquid maturities of 15.07.23, 15.03.24, 01.08.26 and 15.01.27 increasing marginally during morning hours of trading yesterday to intraday highs of 9.90%, 10.00%, 10.30% and 10.35% respectively against its previous day’s closing levels of 9.81/88, 9.92/98, 10.22/27 and 10.30/35. 

In addition, the maturities of 2021s (i.e. 01.05.21, 01.08.21, 15.10.21 and 15.12.21), 2023s (i.e. 15.03.23 and 15.05.23), 01.08.24, 15.06.27 and 01.05.29 were seen changing hands at levels of 9.35% to 9.50%, 9.85% to 9.90%, 10.00% to 10.15%, 10.35% to 10.40% and 10.47% to 10.48% respectively as well.

This was ahead of today’s monetary policy announcement, the third for the year 2019, due at 7:30 a.m. The Central Bank of Sri Lanka kept policy rates unchanged at its announcement on 8 April.

The total secondary market Treasury bond/bill transacted volumes for 29 May was Rs.13.83 billion. 

In the money market, the OMO department of Sri Lanka was seen draining out an amount of Rs.7.57 billion on an overnight basis by way of a repo auction at a weighted average of 8.55% as the net liquidity surplus stood at Rs. 25.22 billion yesterday.  The overnight call money and repo rates averaged 8.43% and 8.58% respectively.

Rupee loses marginally

 In the Forex market, the USD/LKR rate on the spot rate depreciated marginally yesterday to close the day at Rs.176.40/50 against its previous day’s closing levels of Rs.176.30/40 on the back of buying interest from banks.

The total USD/LKR traded volume for 29 May was $ 167.24 million.

Given are some forward USD/LKR rates that prevailed in the market: one month – 177.05/25; three months – 178.65/85; six months – 180.90/10.