Bond markets turn bullish during the week

By Wealth Trust Securities

The sentiment in secondary bond markets turned bullish during week ending 27 May as buying interest during the latter part of the week saw yields dipping. The liquid maturities of 01.05.20, 15.10.21, 01.01.24 and 01.06.26 were seen dipping to weekly lows of 11.85%, 12.15%, 12.32% and 12.50% respectively against its weeks opening highs of 12.15%, 12.45%, 12.65% and 13.00%. 

Furthermore the maturities of 2018’s (i.e. 15.10.18 and 15.11.18) as well as the 15.05.2030 maturity were seen changing hands within the range of 11.55% to 11.75% and 12.55% to 13.00% respectively to reflect a parallel shift downwards of the yield curve apart from the 2021 and 2022 maturities. The bullish trend was further supported by the increase in the foreign holding in rupee bonds for a third consecutive week, which recorded an inflow of Rs. 7.2 billion for the week ending 25 May.

Meanwhile in money markets, the overnight repo rate decreased marginally during the week to average at 7.99% as average net surplus liquidity increased to Rs. 11.34 billion. The average call money rate stood at 8.15% for the week.

Rupee dips further

The rupee on its spot next contract was seen depreciating further during the week to close the week at Rs.147.55/60 against its previous weeks closing of Rs. 146.80/95 on the back of continued importer demand. The daily USD/LKR average traded volume for the first three trading days of the week stood at $ 62.86 million. 

Some of the forward dollar rates that prevailed in the market were one month – 148.35/55; three months – 150.00/20 and six months – 152.40/70.