Bond market at a standstill ahead of monetary policy announcement

By Wealth Trust Securities

Activity in secondary bond markets dried up considerably yesterday ahead of the first monetory policy announcement for 2017, due today at 7.30 a.m. 

The Central Bank of Sri Lanka kept policy rates unchanged for a fifth consecutive month at its December meeting, following a 50 basis points increase in July 2016. Limited trades were seen on the 01.05.21 maturity at levels of 12.67% to 12.75% backed by foreign selling interest. 

Meanwhile in money markets, the Open Market Operations (OMO) department of the Central Bank was seen mopping up an amount of Rs. 30.00 billion on an overnight basis at a weighted average of 7.50% as the net surplus liquidity increased to Rs. 26.69 billion yesterday. The overnight call money and repo rates averaged 8.42% and 8.43% respectively.

Rupee continues to slide    

The USD/LKR rate on the active two weeks and one-month forward contracts were seen depreciating further yesterday to close the day at Rs. 151.20/30 and Rs. 151.60/75 respectively against its previous week’s closing of Rs.151.15/19 and Rs.151.55/65 on the back of continued importer demand.

The total USD/LKR traded volume for 3 February 2017 was $ 74.00 million. 

Some of the forward USD/LKR rates that prevailed in the market were three months - 153.60/70 and six months - 156.05/10.