Saturday Sep 21, 2024
Saturday Sep 21, 2024
Monday, 15 July 2013 00:05 - - {{hitsCtrl.values.hits}}
Parallel shift downwards on the first half of the yield curve
In keeping with the outcome of the weekly Treasury bill auction which reflected a decrease on all three maturities for the first time in six weeks, activity in the secondary bond market increased, with yields dipping considerably reflecting a parallel shift downwards on the first half of the yield curve. The positive sentiment was further supported by the outcome of the Treasury bond auctions where the 5-year maturity fetched a weighted average (WAvg) of 11.17% in comparison to its previous WAvg of 11.45% recorded in March. The 8-year maturity fetched a WAvg of 11.55% in comparison to its previous WAvg of 11.77% recorded in April. It was only the 20-year maturity that reflected a marginal increase with a WAvg of 12.30% in comparison to its previous WAvg of 12.15% recorded in June. The more liquid two five-year maturities (01 April 2018 and 15 August 2018) reflected the highest amount of activity during the week to hit lows of 11.20% and 11.25% respectively in comparison to highs of 11.40% and 11.46%. The yields on the 2-year and 3-year maturities declined as well during the week to lows of 10.70% and 10.87% respectively against earlier highs of 10.90% and 11.00%. Furthermore, demand for secondary market bills too were evident during the week, mainly centering on the 364-day maturity as it was seen changing hands within the range of 10.54% to 10.60%.
Meanwhile in the money market, overnight call money and repo rates remained resilient at levels of 8.60% to 8.70% and 8.15% to 8.35% respectively during the week as surplus liquidity in the system remained high within a range of Rs. 25.22 billion and Rs. 34.15 billion. The Central bank continued conducting daily repo auctions throughout the week in order to drain out excess liquidity from the system at a steady weighted average ranging between 7.79% to 7.81%. However attempts to drain liquidity on a term basis through the outright sales of Treasury bills weren’t successful as no bids were received.
Rupee lost grounds
during the week
The dollar rupee rate on spot contracts traded within a range of Rs. 130.58/130.60 during the early part of the week with thin volumes changing hands. The rupee lost ground during the latter part of the week and was quoted within a range of Rs. 130.95/00. The daily USD/LKR average 
volume traded during the first four days of was $ 57.42 million. Some of the forward dollar rates that prevailed in the market were: 1-Month: Rs. 131.75, 3-Months: Rs. 133.25 and 6-Months: Rs. 135.38.
