Secondary bond market continues to rally; Rupee appreciates

Friday, 3 May 2024 00:10 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The bullish momentum continued in the secondary market yesterday, with yields declining further, predominantly on the medium tenor bonds on the back of keen buying interest. Trading was centred on the short to medium end of the yield curve, with a particular emphasis on 2026-2032 tenors on the back of robust volumes.

Accordingly, the yield on the liquid 2026 tenor of 15.12.26 was seen dropping to an intraday low of 10.80% from its intraday high of 10.85% on the back of healthy demand, with a notable drop in the closing market two-way quote. Similarly, the relatively shorter 2026 tenors of 15.05.26 and 01.08.26 were seen trading within the range of 10.78% and 10.70% respectively. Likewise, the liquid 2027 tenors of 01.05.27 and 15.09.27 were seen declining to intraday lows of 11.09% and 11.15% respectively from its intraday highs of 11.15% and 11.25%. The popular 15.03.28 tenor was seen changing hands at the rate of 11.55%. This interest was also reflected on the other 2028 tenors of 01.07.28 and 15.12.28 which changed hands within the range of 11.70% to 11.62%.

Additionally, notable trades were observed on the 15.05.30 and 01.10.32 medium tenor maturities which saw yields declining from 12.25% to 12.12% and 12.32% to 12.28% respectively, which saw substantial demand.

The total secondary market Treasury bond/bill transacted volume for 30 April was Rs. 98.00 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.64% and 9.08% respectively. The DOD (Domestic Operations Department) of the Central Bank injected liquidity by way of an overnight repo auction for Rs. 14.82 billion at a weighted average rate of 8.62%.

The net liquidity surplus stood at Rs. 167.69 yesterday. An amount of Rs. 2.77 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 9.50% as against Rs. 185.58 billion has been deposited at Central Bank’s SDFR (Standard Deposit Facility Rate) of 8.50%.

Forex market

In the forex market, the USD/LKR rate on spot contracts closed the day higher at Rs. 296.80/297.10 against its previous day’s closing level of Rs. 297.50/298.50.

The total USD/LKR traded volume for 30 April was

$ 20.65 million.

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