Money market liquidity remains high

Monday, 17 August 2020 00:02 - - {{hitsCtrl.values.hits}}

Rupee appreciates sharply

By Wealth Trust Securities

The secondary bond market ignited during the week ending 14 August 2020 with yields decreasing considerably, to reflect a downward shift of the overall yield curve on a week on basis. The downward momentum was fuelled by the outcome of the weekly Treasury bill auction, where the total offered amount at a weekly auction was fully subscribed to, for the first-time in three weeks.

Yields of the liquid maturities of 2022’s (i.e. 15.11.22 and 15.12.22) and 2023’s (i.e. 15.01.23 and 01.09.23) as well as the 15.09.24, 01.05.25, 01.02.26, 15.08.27 and 15.05.30 hit lows of 5.58%, 5.60%, 5.63%, 5.90%, 6.13%, 6.37%, 6.47%, 6.96% and 7.28% respectively against its previous weeks closing levels of 5.82/90, 5.88/95, 5.90/00, 6.05/15, 6.28/30, 6.55/60, 6.60/70, 7.08/15 and 7.30/40. However, selling interest at these levels curtailed any further downward movement with yields closing marginally higher once again than its weekly lows.

The foreign holding in rupee bonds yet again recorded a marginal outflow of Rs. 0.29 million for the week ending 12 August 2020.

The daily secondary market Treasury bond/bill transacted volumes for the first four days of the week averaged Rs. 14.10 billion.

In money markets, the overall market liquidity of Rs. 165.62 billion saw weighted average rates on overnight call money and repos hold steady at 4.53% and 4.55% respectively for the week.

Rupee hits Rs. 182.40

In the Forex market, the USD/LKR rate on spot contracts appreciated considerably during the week to hit a high of Rs. 182.40, a level last seen in March 2020 on the back of continued selling interest on spot and forward contracts. However, it was seen closing the week lower at Rs. 183.50/70, but still considerably higher from its previous week’s close of Rs. 185.22/27.

The daily USD/LKR average traded volume for the first four days of the week stood at $ 89.58 million.

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