Bullish momentum at weekly T. Bill auctions continues

• Rupee depreciates further

By Wealth Trust Securities

The weekly Treasury bill weighted average rates were seen continuing its bullish momentum, recording dips across all three maturities for a sixth consecutive week at its auctions held yesterday. This week’s decline was particularly steep, with the 91-day maturity falling by 39 basis points to 9.04%, the 182-day maturity by 33 basis points to 9.43% and the 364-day maturity by 33 basis points to 9.57%. The auction went fully subscribed with the entire offered amount of Rs. 177.50 billion accepted at the 1st phase. The total bids received exceeded the offered amount by 2.24 times.

The 2nd phase of subscription, for the 91- and 182-day maturities will be opened until 4:00 p.m. on the day before the settlement date (i.e., 16.05.2024) at the respective weighted averages determined at the 1st phase of the auction. Given below are the details of the auction.

The secondary bond market remained active, kicking off the day on a bullish note that saw substantial buying interest causing yields to decline with healthy volumes transacted. However, at the latter part of the day some profit taking pressure was seen that caused a slight reversal in gains. 

The 2026 tenors initially rallied and saw yield on 15.12.26 maturity decline to an intraday low of 9.93% from an intraday high of 10.00%. While the 15.05.26 and 01.06.26 maturity traded at 10.00% and 10.10% respectively. However, two-way quotes were seen edging up at the tail end of the day across all the yield curve, on the back of selling pressure. This momentum was also witnessed on the popular 2028 durations, such as the 15.03.28, 01.07.28 and 15.12.28 which initially hit intraday lows of 10.50%, 10.60 and 10.65% respectively before moving back up to highs of 10.60% and 10.75% each respectively. Meanwhile, trades were observed on the 2027 tenors of 01.05.27 and 15.09.27 trading within the range of 10.25% to 10.20%. While the medium tenor 2030 (i.e. 15.05.30 and 15.10.30) and 01.10.32 maturities were seen trading within the ranges of 11.45% to 11.60% and 11.75% to 11.85% respectively.

The total secondary market Treasury bond/bill transacted volume for 14 May was Rs. 18.029 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.65% and 8.69% respectively while the net liquidity was a surplus Rs. 159.48 billion yesterday. An amount of Rs. 27.08 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 9.50% against an amount of Rs. 186.56 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.50%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day, depreciating further, at Rs. 302.00/302.40, against its previous day’s closing level of Rs. 301.00/302.00.

The total USD/LKR traded volume for 14 May was $ 10.90 million.