Volatile week ends on a positive note

• Foreign momentum reverses
• Money market liquidity decreases
  
   

By Wealth Trust Securities

The secondary bond market was seen closing the week ending 6 December on a positive note subsequent to yields seesawing during the week, recording a marginal parallel downward shift of the overall yield curve.  Yields seesawed mainly on the two 2024 maturities (i.e.15.06.24 and 15.09.24) as selling interest saw its yields increase to weekly highs of 9.90% and 9.93% respectively during various times of the week while buying interest saw it dip to weekly lows of 9.78% and 9.80%.  

Furthermore, maturities of two 2023s (i.e. 15.03.23 & 15.07.23), 15.03.25 and 01.08.26 witnessed volatility as well from weekly highs of 9.65% each, 10.20% and 10.25% respectively to lows of 9.40%, 9.50%, 10.08% and 10.05%. 

In addition, maturities of 2024s (i.e. 01.01.24 and 01.08.24), 01.06.26, 15.10.27 and 15.09.34 were seen changing hands within the range of 9.90% to 10.02%, 10.10% to 10.26%, 10.00% to 10.10% and 10.30% to 10.35% respectively as well.

Foreign investors in Rupee bonds were seen exiting during the week ending 4 December to the tune of Rs.4.2 billion, reversing six consecutive weeks of inflows totalling Rs. 11.90 billion. 

The daily secondary market Treasury bond/bills transacted volume for the first four days of the week averaged Rs. 9.76 billion.  

In money markets, the overall liquidity in the system decreased marginally by Rs. 2.2 billion to Rs. 9.52 billion during the week as call money and repo rates averaged at 7.51% and 7.55% respectively for the week.

The Open Market Operations (OMO) Department of the Central Bank of Sri Lanka was seen injecting liquidity during the week by way of overnight and seven day reverse repo auctions at weighted averages ranging from 7.51% to 7.62%. 

Furthermore, the OMO department of Central Bank injected liquidity by way of an outright purchase of Treasury bond for a an amount of Rs.1.48 billion by buying back the maturity of 01.03.21 at a weighted average of 8.47%. 

 

Rupee loses further 

The USD/LKR rate on spot contracts depreciated further during the week to close the week at levels of Rs. 181.15/25 against its previous weeks closing level of Rs. 180.90/00 on the back of importer demand and continued buying interest by banks. 

The daily USD/LKR average traded volume for the first four days of the week stood at $ 66.28 million.

Some of the forward dollar rates that prevailed in the market were one month – 181.55/75; three months – 182.45/75 and six months – 184.25/65.