Activity in secondary bond markets increases despite short trading week

  By Wealth Trust Securities

Activity in secondary bond markets increased during the short trading week ending 15th September with yields fluctuating within a wide range. 

Yields of the liquid maturities of 15.09.19, 01.03.21, 01.10.22, 01.09.23 01.08.24 and 01.08.26 hit weekly highs of 11.20%, 11.32%, 11.57%, 11.64%, 11.65% and 11.76% respectively against its previous weeks closing levels of 10.85/00, 10.95/10, 11.25/33, 11.35/43, 11.52/58 and 11.62/68. 

Furthermore, at the weekly Treasury bill auction, the weighted averages remained steady in comparison to the previous week’s steep drop, with the total bids to offer ratio dipping to an 11-week low of 2.30:1. 

However, buying interest at these levels, by both local and foreign investors resulted in the yields dipping once gain to hit lows of 11.00%, 11.10%, 11.45%, 11.29%, 11.50% and 11.58% respectively before closing the week at 11.05/12, 11.18/22, 11.40/45, 11.45/52, 11.50/55 and 11.58/62. 

Foreign buying of Rupee bonds which has been prevalent over the past 6 weeks, continued with an inflow of approximately Rs.1.4 billion. In the secondary bill market, September 2017 bills were seen changing hands within the range of 10.35% to 10.45%. 

In the money market, overnight call money and Repo rates averaged at 8.40% and 8.62% respectively as the Open Market Operations (OMO) Department of Central Bank continuously infused liquidity by way of overnight Reverse repo auctions at weighted averages ranging between 8.48% to 8.49%

Rupee depreciates during the week

The rupee on spot contracts depreciated during the week to close at Rs.145.65/80 against its previous weeks closing level of Rs.145.25/35 on the back of seasonal importer demand. 

The daily USD/LKR average traded volume for the first two days of the week stood at $ 95.77 million. 

Given are some forward dollar rates that prevailed in the market: one month – 146.45/55; three months – 148.10/20; six months – 150.55/65.