Debt market review

By Wealth Trust Securities

Subsequent to the release of inflation numbers, secondary market bond yields increased on the back of moderate selling pressure to close the week marginally higher than its previous week’s closing levels as activity remained high during the week.

Once again, a majority of volume during the week surrounded the two liquid five year maturities (i.e. 1.04.2018 and 15.08.2018) as it closed the week at levels of 11.10/12 and 11.17/20 respectively against its previous week’s closing levels of 11.06/10 and 11.14/15 subsequent to hitting intraweek lows of 11.05% and 11.10% and highs of 11.16% and 11.20% respectively.

Furthermore, activity on the longer leg of the yield curve was witnessed as well with the eight year maturity closing the week at 11.55/60 from a weekly low of 11.46% and high of 11.62%. In addition, the 364 day bill was seen been quoted at levels of 10.88/95 as well.

Overnight call money and repo rates remained steady during the week to average 9.00% and 8.37% respectively as no Open Market Operations (OMO) was conducted during the week. Surplus liquidity fluctuated from a weekly low of Rs. 2.72 billion to a high of Rs. 9.98 billion during the week.

Rupee loses ground marginally

The rupee lost ground to an intraweek low of Rs. 130.53 on the back of import led demand and remained steady at these levels during the latter part of the week as export conversions set in. The total USD/LKR traded volume for the first four days of this week stood at US $ 71.10 million. Given are some forward dollar rates that prevailed in the market; one month –127.30, three months – 128.90, six months – 131.20.