Secondary bond market yields increase during the week

Foreign holding in rupee bonds turns negative for the first time in four weeks

By Wealth Trust Securities

Continued selling interest across the yield curve during the week, ending 4 May, saw secondary market bond yields increasing for a third consecutive week, resulting in a parallel shift upwards of the yield curve once again. 

The upward movement was also reflected in the weekly Treasury bill auction where the weighted average on the 364th day increased for the first time in four weeks. Further, the foreign holding in rupee bonds was seen reversing its increasing trend witnessed over the previous three weeks to record an outflow of Rs. 5.4 billion for the week, ending 2 May.

Activity centred on the liquid maturities of 15.03.23, 01.08.24, 01.09.28 and 15.05.30 as its yields were seen increasing to weekly highs of 10.43%, 10.45%, 10.65% and 10.70%, respectively, against its previous weeks closing levels of 10.15/20, 10.15/25, 10.35/40 and 10.40/50.  In addition, on the short end of the curve, 15.09.19 and 15.12.21 maturities were seen hitting weekly highs of 9.90% and 10.10%, respectively, as well.

The daily secondary market Treasury bond/bill transacted volumes for the first three days of the week averaged Rs. 7.96 billion.

In money markets, the overnight call money and repo rate averaged at 7.87% and 7.99% respectively for the week as the OMO department of the Central Bank continuously drained out liquidity by way of overnight repo auctions at weighted averages ranging from 7.50% to 7.54%. The average net surplus liquidity for the week stood at Rs. 8.19 billion.   

Rupee gains during the week

The rupee on spot contracts closed the week higher at Rs. 157.50/65, subsequent to hitting a weekly low of Rs. 157.90 against its previous weeks closing levels of Rs. 157.80/90 on the back of selling interest by banks.

The daily USD/LKR average traded volume for the first three days of the week stood at $73.40 million.

Given are some forward dollar rates that prevailed in the market: 

one month – 158.50/70; three months – 159.70/00; six months – 161.90/10.