Weekly averages decrease for fifth consecutive week

• 182-day bill dips below 8% for first time in over 15 months
• Bond yields rally marginally

By Wealth Trust Securities

The declining trend in the weekly Treasury bill weighted average yields continued for a fifth consecutive week with the 182 day bill dipping below the 8.00% psychological mark for the first time since 7 February 2018.  

The 182-day bill recorded the sharpest decline of 13 basis points to 7.96% closely followed by the 91-day maturity by 10 basis points to 7.89% and the 364-day maturity by eight basis points to 8.38%. The exact offered amount of Rs. 25 billion was accepted at the auction as the bid to offer ratio increased to 3.13: 1. 

The expectations of the outcome of the weekly Treasury bill auction saw yields in the secondary bond market decrease once again yesterday, mainly on the short end of the curve. The yields on the liquid maturities of three 2021’s (i.e. 01.05.21, 01.08.21, 15.10.21 & 15.12.21), two 2023’s (i.e. 15.03.23 & 15.07.23) and 15.06.24 were seen dipping to intraday lows of 8.75% each, 8.87%, 8.90%, 9.50% each and 9.80% respectively against its previous day’s closing levels of 8.78/88, 8.83/93, 8.90/00, 8.95/00, 9.45/55, 9.57/60 and 9.82/84.  In addition, the 15.03.35 maturity traded at a level of 10.32% as well. In the secondary bill market, January 2020 maturities were seen changing hands at levels of 7.85% to 7.90% subsequent to the auction results.  The total secondary market Treasury bond/bill transacted volumes for 23 July was Rs. 4.75 billion. 

In money markets, the overnight call money and repo rates averaged 7.79% and 7.86% respectively as the overnight net liquidity surplus increased to Rs. 41.85 billion yesterday. 

Rupee losses further

In the Forex market, the downward trend on the rupee continued as the USD/LKR rate on spot contracts were seen closing the day at a level of Rs. 176.20/30 against its previous day’s closing level of Rs. 176.00/10 driven by continued importer demand. 

The total USD/LKR traded volume for 24 July was $ 91.64 million.

Some forward USD/LKR rates that prevailed in the market were 1 month – 176.80/90, 3 months – 178.05/20, 6 months – 179.95/15.