Bullish outcome at primary auctions

• Foreign inflow gathers momentum
• Rupee dips

By Wealth Trust Securities

The trading week ending 16 September saw the weekly Treasury bill weighted average rates on all three maturities decreasing for the first time in six weeks in addition to the full amount on offer being accepted for the first time in four weeks. Furthermore, the full amount of Rs. 20 billion offered through the second phase of the auction was taken up as well.

The 10-year 01.07.2032 Treasury bond auction too produced an inspiring outcome with its offered amount of Rs. 45 billion being taken up fully at its first phase of the auction in addition to a further Rs. 9.00 billion being accepted through its direct issuance window, while it received Rs. 18.08 billion in bids.

The activity levels in the secondary bond market remained bearish during the first half of the week while picking up marginally towards the latter part of the week following the auction outcomes.

The yield on the liquid 01.07.2032 maturity was seen declining to a weekly low of 29.25% against its auction weighted average rate of 29.96%.

The foreign inflow into Rupee bonds continued for a second consecutive week to the tune of Rs. 2.98 billion for the week ending 14 September, accumulating total inflow of Rs. 3.91 billion for the past two weeks. The daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 30.02 billion.

In money markets, the weighted average rate on repo and call money was at 15.50% each for the week while the total outstanding liquidity deficit decreased to Rs. 556.58 billion by the end of the week against its previous weeks of Rs. 565.40 billion. The CBSL’s holding of Government Securities stood at Rs. 2,361.57 billion against its previous weeks of Rs. 2,322.71 billion.

 USD/LKR

In the forex market, the middle rate for USD/LKR spot contracts depreciated further during the week to close at Rs. 362.90 against its previous week’s closing of Rs. 362.00.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 46.20 million.

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