Positive momentum continues for second consecutive week

• Foreign demand for Government  securities continues 
• Rupee depreciates during the week

By Wealth Trust Securities

The secondary bond market remained active during the week ending 9 June with yields continuing its decreasing trend, reflecting a downward shift of the overall yield curve for a second consecutive week. 

The downward trend was fuelled by the outcome of the weekly Treasury bill auction at which weighted average rates decreased sharply across the board while the total offered amount of Rs. 140 billion was fully subscribed at the first phase of the auction. A further amount of Rs. 35.00 billion was raised at its phase II.

Bond yields decreased across the curve as the liquid maturities of 01.07.25, 15.05.26, 2027’s (i.e. 01.05.27 and 15.09.27) and 15.01.28 dipped to weekly lows of 25.50%, 24.50%, 23.10% each and 22.00% respectively against its previous week’s closing levels of 26.75/27.50, 25.75/26.50, 24.70/80 each and 23.50/24.00. The positive momentum was even seen in the secondary bill market as the 91 day, 182 and 364 day maturities changed hands at lows of 22.50%, 20.50% and 18.25% respectively.

Meanwhile the foreign component in rupee Government securities increased further by Rs. 22.24 billion for the week ending 8 June. 

The daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 32.87 billion.

In money markets, the Domestic Operations Department (DOD) of Central Bank injected liquidity during the week by way of overnight to 30-day Reverse repo auctions at weighted average yields ranging from 13.45% to 17.01%. The total outstanding liquidity deficit increased to Rs. 78.85 billion by the end of the week against its previous week’s deficit of Rs. 6.83 billion while the Central Bank of Sri Lanka (CBSL) holding of Government Securities decreased to Rs. 2,528.03 billion against its previous week’s of Rs. 2,592.87 billion.

USD/LKR

In the forex market, USD/LKR rate on spot contracts were seen depreciating during the week to close the week at Rs. 297.50/298.00 against its previous week of Rs. 291.75/292.50, subsequent to trading within the range of Rs. 290.25 to Rs. 297.50.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 60.53 million. 

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