Momentum remains positive as demand for shorter tenures continue

By Wealth Trust Securities

Momentum in the secondary bond market remained positive yesterday as well, with yields of the shorter tenure maturities declining marginally, backed by continued buying interest. Rates of the 2022’s (i.e. 01.07.22 and 01.10.22) and 2023’s (i.e. 15.03.23, 15.07.23 and 15.12.23) dipped to intraday lows of 9.30%, 9.35%, 9.60%, 9.65% and 9.70% respectively against opening highs of 9.40%, 9.45%, 9.65%, 9.70% and 9.75% while the 2021’s (i.e. 01.05.21 ,01.08.21 and 15.12.21) traded within the range of 9.00% to 9.10%.  

Furthermore, maturities on the mid to long end of the yield curve, such as the 15.06.24, 01.08.26, 15.01.27 and 01.05.29 changed hands at levels of 9.84% to 9.87%, 10.11%, 10.15% to 10.17% and 10.25% to 10.27% .  

The total secondary market Treasury bond/bill transacted volumes for 5 July was Rs. 13.81 billion. 

 In money markets, the OMO (Open Market Operations) Department of the Central Bank of Sri Lanka was seen draining out liquidity by way of a seven day repo auction and an overnight repo auction, as the overnight net liquidity surplus increased to Rs. 26.05 billion. 

The seven-day term Repo auction drained out an amount of Rs. 11.4 billion at a weighted average yield of 7.87% while a further Rs. 6.25 billion was drained out from the overnight auction at a weighted average yield of 7.72%. Overnight call money and repo rates averaged 7.80% and 7.85% respectively. 

Rupee appreciates marginally 

In the Forex market, the USD/LKR rate on spot contracts appreciated marginally yesterday to close the day at levels of Rs. 176.00/10 against its previous day’s closing levels of Rs. 176.12/20 on the back of selling interest by banks.

The total USD/LKR traded volume for 5 July was $ 47.01 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month – 176.70/90; 3 months – 177.80/10 and 6 months – 179.70/10.