Benchmark interest rates resume their downward trend

Thursday, 15 August 2013 00:01 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The weighted average’s (WAvg) on both the 91-day and 364-day bills resumed its downward trend to reflect dips of two basis points (bp) and one bp respectively to 8.61% and 10.56%, while the WAvg on the 182-day bill remained unchanged at 9.66% at yesterday’s weekly Treasury bill auction. The 91-day and 182-day maturities were offered after a lapse of two weeks with the 364-day maturity continuing to dominate the auction as it represented 77% of the total accepted amount of Rs. 8.2 billion. However interestingly, the total accepted amount at the auction was

Rs. 3.7 billion lower than its total offered amount of Rs. 12 billion to record the lowest accepted amount in 18 weeks. Subsequent to the release of the auction results, demand for the 364-day bill was evident in secondary markets as it was seen changing hands at levels of 10.52% while durations centering the 182-day bill were seen changing hands within the range of 9.70% to 9.80% as well. However, yields in secondary bond markets remained stagnant once again with the liquid two five year maturities (i.e. 1 April 2018 and 15 August 2018) closing the day at levels of 11.28/30 and 11.33/35 respectively subsequent to changing hands at 11.29% and 11.35%. The overnight call money and repo rates remained steady to average 8.58% and 8.04% respectively as surplus liquidity in money markets remained high at Rs. 25.43 billion. The Open Market Operations (OMO) department of the Central Bank was seen mopping up an amount of Rs. 8 billion on an overnight basis by way of a repo auction at a WAvg of 7.53% while a further Rs. 0.80 billion was mopped up for a period seven days

at a WAvg of 7.93% as well. In addition, a further amount of Rs. 16.63 billion was seen been deposited at CBSL’s repo window of 7.00%. Rupee gains beyond Rs. 131.60 for the first time in two weeks The USD/LKR rate on tom, spot and spot next contracts appreciated yesterday below Rs. 131.60 for the first time in two weeks to close the day at levels of Rs. 131.50/53, Rs. 131.52/55 and Rs. 131.575/63 respectively. Dollar inflows into the system coupled with a drop in importer demand was seen as the reasons behind the appreciation according to market sources. The total USD/LKR traded volume for the previous day (13 August 2013) stood at $ 56.53 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 132.44; 3-Months: Rs. 134.09 and 6-Months: Rs. 136.39.