CBSL injects term funds for the fourth time as bond prices edge up marginally

The Open Market Operations (OMO) department of Central Bank conducted its fourth successful term reverse repo auction yesterday, where it injected an amount of Rs 9 Bn at a weighted average of 9.87% for a period 31 days, valued for today.

The step was considered to be more of a roll over than a fresh injection of funds with the initial term auction coming up for maturity yesterday.  In order to meet this maturity and the overall liquidity shortfall in the system a volume of Rs 10.5 Bn was injected on an overnight basis yesterday by way of a reverse repo auction once again at a weighted average of 9.71%. This is turn saw overnight call money and repo rates remain steady to average 10.59% and 9.64% respectively.

Secondary bond markets remained active yesterday as yield dipped marginally during the early part of the day by around seven basis points on the more liquid five year and six year maturities against its intraday highs of 12.75% and 13.20% respectively, as limited amount of volumes were seen changing hands. The announcement and outcome of the term reverse repo auction coupled with CBSL’s projections for inflation to ease to mid-single digit levels by the second quarter of next year along with growth expected at 7.5% was seen as the reasons behind the dip in yields according to market sources.

Meanwhile in Forex markets yesterday, the rupee was seen trading at an intraday low of Rs 130.97 to a high of Rs 130.80 to close the day at Rs 130.90. The total USD/LKR traded volume for the previous day (07-11-12) stood at US $ 40.00 million. (Source: Wealth Trust Securities)