Bond yields dip once again ahead of weekly auction

By Wealth Trust Securities

The Central Bank of Sri Lanka was seen keeping its policy rates unchanged at 7.00% and 8.50% for a fourth consecutive month at its monetary policy meeting held yesterday for November.

This intern saw secondary market bond yields decline once again mainly on the liquid maturities of 15.09.19, 01.08.24 and 01.08.25 to daily lows of 11.60%, 12.50% and 12.58%  respectively against its previous day’s closing levels of 11.65/70, 12.65/75 and 12.70/90. In addition the shorter end maturities of 01.03.17 and 15.06.17 were seen changing hands at levels of 9.30% to 9.42% and 10.00% respectively while September 2017 bill maturities traded at 10.25%.

This was ahead of today’s weekly Treasury bill auction, where a total amount of Rs. 25 billion will be on offer consisting of Rs. 10.00 billion on the 91-day maturity, Rs. 8 billion on the 182-day maturity and a further Rs. 7 billion on the 364-day maturity. At last week’s auction, the weighted average on the 182-day bill was seen increasing by six basis points to 9.71% while the 364-day increased by five basis points to 10.25% while the 91-day remained unchanged at 8.60%. 

Meanwhile in money markets, overnight call money and repo rates averaged at 8.42% and 8.61% respectively as the OMO (Open Market Operations) department of the Central Bank was seen mopping liquidity for the first time since the 22 December 2015. A total amount of Rs. 3.00 billion was drained out at 7.50% as the overall liquidity increased to a net surplus of Rs. 14.83 billion. 

Rupee remains broadly steady

The USD/LKR rate on the active spot next contract was seen closing the day broadly steady at Rs. 149.20/30 yesterday. The total USD/LKR traded volume for 28 November 2016 was $ 57.01 million. 

Some of the forward USD/LKR rates that prevailed in the market were one month - 150.00/10; three months - 151.65/75 and six months - 154.25/35.