Weekly weighted averages continue free fall

• Bids to offer ratio increases to a 41-week high
• Secondary bond market yields follow suit
• Rupee appreciates

By Wealth Trust Securities

The weekly weighted averages continued its decreasing trend, recording steep falls across all three maturities at its auctions held yesterday. The benchmark 364 day bill recorded a dip of 37 basis points to 9.44% closely followed by the 91 day bill by 38 basis points to 8.51% and the 182 day bill by 09 basis points to 9.00%. The total offered amount of Rs.22 billion was successfully accepted at the auction as its bids to offer ratio increased to 41 week high of 4.96:1.  

The secondary bond market remained active yesterday as continued buying interest resulted in yields dipping across the curve. The liquid maturities of two 2021’s (i.e. 01.05.21 and 01.08.21), 15.03.22, three 2023’s (i.e. 15.03.23, 15.07.23 and 15.12.23), 15.03.24, 01.08.26, two 2027’s (i.e. 15.01.27 and 15.06.27) and 01.05.29 saw its yields dip to intraday lows of 9.80%, 9.80%, 10.05%, 10.38%, 10.35%, 10.43%, 10.45%, 10.70%, 10.75%, 10.82% and 10.95% respectively in comparison to the previous day’s closing levels of 9.90/00, 9.95/00, 10.10/18, 10.40/44, 10.46/50, 10.50/55, 10.62/65, 10.82/85, 10.90/92, 10.95/00 and 11.00/02.

The total secondary market Treasury bond/bill transacted volumes for 7 May was Rs. 5.11 billion. In money markets, the OMO department of Sri Lanka drained out an amount of Rs. 25.6 billion on an overnight basis by way repo auction at a weighted average of 8.40% as the net surplus liquidity in the system stood at a high of Rs. 75.21 billion yesterday. The overnight call money and repo rates averaged 8.38% and 8.61% respectively. 

Furthermore, the OMO department drained out liquidity on a term basis as it was seen mopping up excess liquidity by way of two repo auctions for durations of two and seven days. In total an amount of Rs. 13.2 billion was mopped up at weighted averages of 8.50% and 8.54% respectively through the auctions.

Rupee appreciates considerably      

The USD/LKR rate on spot contracts appreciated considerably yesterday to close the day at levels of Rs. 174.90/10 against its previous day’s closing levels of Rs. 176.85/00 on the back of continued selling interest by banks.

The total USD/LKR traded volume for 7 May was $ 34.14 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month - 175.85/15; 3 months - 177.60/90 and 6 months - 180.30/70.