Bond yields seesaw to close the week marginally higher

Monday, 17 March 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Activity in secondary bond markets dried up towards the latter part of the week ending 14 March 2014 subsequent to yields seesawing during the early part of the week and closing the week marginally higher in comparison to its previous week’s closing levels.

Yields were seen dipping during the early part of the week mainly on the liquid two 2018 maturities (i.e. 01.04.2018 and 15.08.2018) and the 2019 maturities (i.e. 15.01.2019 and 01.07.2019) to weekly lows of 8.80%, 8.90%, 9.00% and 8.96% respectively. However, selling interest from this point onwards saw yields increase once again to weekly highs of 8.92%, 8.98%, 9.05% and 9.10% respectively towards the latter part of the week. In addition, on the longer end of the yield curve, the seven year maturity of 01.05.2021 was seen changing hands within the range of 8.98% to 10.02% during the week. Meanwhile, Continued demand for Treasury bills saw its yields decline during the week, which reflected favourably on the outcome of the weekly Treasury bill auction at where weighted averages (WAvgs) declined by 2 basis points (bp), 3 bp and 1 bp respectively on the 91-day, 182-day and 364-day maturities to levels of 6.69%, 6.85% and 7.06%. This in turn saw the yield curve steepen a bit further.

Meanwhile in money markets, overnight surplus liquidity decreased considerably during the week to a five and half month’s low of Rs. 0.86 billion on 13 March 2014. However it was seen increasing once gain on Friday to close week at Rs. 23.99 billion with the Open Market Operations (OMO) Department of Central Bank draining out a total amount of Rs. 21.62 billion by way of three term repo auctions for durations of 28 days at a weighted average (WAvg) of 6.72%, 63 days at a WAvg of 6.83% and 77 days at a WAvg of 6.85% valued for Friday 14 March. This intern saw the overnight call money and repo rates increasing marginally to average 6.91% and 6.36% respectively for the week in comparison to its last week’s averages of 6.88% and 6.34%. Rupee closes the week steady The rupee lost ground during the latter part of the week on the back of

importer demand to a weekly low of Rs. 130.70 against its four month high of Rs. 130.50 recorded during the early part of the week to close the week steady at Rs. 130.58/64 once again. The daily average USD/LKR traded volume for the first four days of the week was at $ 74.46 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.19, 3-Months: Rs. 132.16 and 6-Months: Rs. 133.61.