Weekly averages continue to tumble

• Secondary bond market activity picks up

By Wealth Trust Securities

The weekly Treasury bill weighted averages continued to decrease at its auctions conducted yesterday. The weighted average on the benchmark 364-day maturity recorded a decrease of 11 basis points to 8.59% followed by the 91-day bill and 182-day bill by 7 and 17 basis points, respectively, to 8.17% and 8.32%. The total offered volume of Rs. 23 billion was successfully subscribed as the bids to offer ratio stood at 2.72:1. 

The downward outcome of the auctions saw activity in the secondary bond market pickup yesterday as yields decreased marginally, mainly of the short end to the long end of the curve, on the back of renewed buying interest. The yields on the liquid maturities of 2021’s (i.e. 01.03.21, 01.05.21, and 15.10.21), 15.01.27 and 01.05.29 decreased to lows of 9.07%, 9.12%, 9.23%, 10.20% and 10.31%, respectively, against its opening highs of 9.10%, 9.18%, 9.25%, 10.21%, and 10.33%. In addition, the maturities of 15.07.23, two 2024’s (15.03.24 & 15.06.24) and 15.03.25 traded at levels of 9.79%, 9.85% to 9.90% and 10.05%, respectively, as well. 

The total secondary market Treasury bond/bill transacted volumes for 2 July was Rs. 8.08 billion.  

In money markets, the overnight call money and repo rates averaged 7.81% and 7.87%, respectively, as the OMO Department of the Central Bank was seen draining out an amount of Rs. 10 billion by way of overnight auction at a weighted average of 7.71%. The net surplus liquidity in the system decreased to Rs. 12.18 billion yesterday.

Rupee appreciates

In the Forex market, the USD/LKR rate on spot contracts were seen closing the day higher at Rs. 176.00/10 subsequent to hitting an intraday high of 176 as against its previous day’s closing levels of Rs. 176.30/40 on the back of export conversions and selling interest by banks.

The total USD/LKR traded volume for 2 July was $ 39.74 million

Some of the forward USD/LKR rates that prevailed in the market were 1 month – 176.65/85; 3 months – 178.05/35, and 6 months – 180.05/45.