Yields continue to pick up ahead of T-bill auction; rupee appreciates slightly

Wednesday, 7 August 2024 01:57 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The Secondary Bond Market yields continued to increase yesterday as the liquid maturities of 15.02.28, 15.03.28, 01.07.28, 15.09.29 and 15.10.30 hit intraday highs of 12.23%, 12.30%, 12.47% 12.57% and 12.885% respectively against its previous day’s closing levels of 12.10/20, 12.15/25, 12.35/45, 12.45/50 and 12.75/85. In addition, 01.12.31 maturity changed hands at levels of 12.92% to 12.95% as well.

The Treasury bill auction due today will have a total amount of Rs. 155 billion on offer, a reduction of Rs. 15 billion over its previous week. This will consist of Rs. 55 billion each on the 91-day and 182-day maturities and Rs. 45 billion on the 364-day maturity.

For context, last Wednesday’s Treasury bill auction weighted average yields remained unchanged following consecutive three weeks of declines. Accordingly, the rates were recorded at 9.14% for the 91-day tenor, 9.34% for the 182-day tenor, and 9.95% for the 364-day tenor. The auction went undersubscribed, with only 94.43% (Rs. 160.53 billion) of the Rs. 170.00 billion was raised, across the 1st and 2nd phases. Strong demand was observed on the shorter tenors, with 84% of the accepted bids attributable to the 91-day and 182-day tenors.

The total secondary market Treasury bond/bill transacted volume for 5 August was Rs. 14.59 billion.

In money markets, the weighted average rate on overnight call money was at 8.56% and repo was at 8.88%.

The net liquidity surplus stood at Rs. 34.23 billion yesterday as an amount of Rs. 102.96 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.25% as against an amount of Rs. 5.70 billion withdrawn from the Central Bank’s SLFR (Standard Lending Facility Rate) of 9.25%.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight and 7-day term reverse repo auction for Rs. 13.04 billion and Rs. 50.00 billion at the weighted average rates of 8.45% and 8.85% respectively.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts appreciated marginally to close trading yesterday at Rs. 302.05/302.15 against its previous day’s closing level of Rs. 302.30/302.43.

The total USD/LKR traded volume for 5 August was $ 32.90 million.

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)

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