Benchmark interest rates resume downward trend

Thursday, 11 July 2013 01:03 - - {{hitsCtrl.values.hits}}

by wealth trust securities The Weighted Averages (WAvg) on all three maturities dipped for the first time in six weeks at its weekly Treasury bill auction conducted yesterday.

All three maturities reflected a dip of two basis points (bp) each on its WAvg to 8.63%, 9.68% and 10.64% respectively. Moreover this reflects an amalgamated dip of 216 bp, 242 bp and 222 bp respectively on the 91-day, 182-day and 364-day maturities since the December 2012 policy rate cut of 25 bp. The 364-day bill continued to dominate the auction as it represented 85% of the total accepted amount. Secondary bond market yields dipped marginally yesterday mainly on the liquid two five year maturities (i.e. 1 April 2018 and 15 August 2018) once again as it was seen hitting intraday lows of 11.32% and 11.38% respectively against its opening levels of 11.35% and 11.40% on the back of the dip in weighted averages at the bill auction. In addition, yields on the 2-year and the 3-year maturities dipped as well as it was seen closing

the day at levels of 10.75/85 and 10.90/95. This was ahead of the Treasury bond auction due today for durations of 5-years, 8-years and 20-years. Meanwhile the 364-day bill was seen closing the day at levels of 10.52/58 in secondary markets as well. The weighted averages on overnight call money and repo rates dipped marginally to 8.69% and 8.12% respectively as surplus liquidity remained high at Rs. 30.66 billion yesterday. The Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs. 27.89 billion on an overnight basis at a weighted average of 7.80% by way of a repo auction while a further amount of Rs. 2.77 billion was seen been deposited at CBSL’s repo window of 7.00%. Rupee remains steady The USD/LKR spot rate continued to remain steady at Rs. 130.60/70 yesterday while spot next contracts were seen changing hands within the range of Rs. 130.95 to Rs. 131.00. The total USD/LKR traded volume for the previous day (09 July 2013) stood at $ 30.33 million. Some of the forward dollar rates that prevailed in the market were 1-month – Rs. 131.38; 3-months – Rs. 132.95 and 6-months – Rs. 135.13.