Demand on shorter leg of yield curve sees primary auction yields dip further
Thursday, 18 July 2013 00:00
-
- {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The high demand for shorter tenure maturities in secondary markets over the last few days reflected favourably on weighted averages (WAvg) at yesterday’s weekly Treasury bill auction as it continued its downward trend.
The WAvg on the 364 day bill dipped the most by 5 basis points to 10.59% while the WAvg on the 182 day bill dipped by two basis points to 9.66%. However the WAvg on the 91 day bill remained unchanged at 8.63%.
The market favourite 364 day bill continued to dominate the auction as it represented 88% of the total accepted amount, which was Rs. 7.4 b more than its initial offered amount of Rs. 8 b.
Activity in secondary bond markets remained high as yields dipped marginally yesterday mainly surrounding the liquid two five year maturities (i.e. 1 April 2018 and 15 August 2018) as it was seen hitting intraday lows of 11.25% and 11.34% respectively against its opening levels of 11.28% and 11.37%. In addition, the three year maturity was seen changing hands at levels of 11.00% while the 364 day bill was seen changing hands within the range of 11.52% to 11.55% in secondary markets as well.
Overnight call money and repo rates remained steady to average 8.71% and 8.07% respectively as surplus liquidity increased marginally to Rs. 26.65 b yesterday. The Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs. 25.51 b on an overnight basis at a weighted average of 7.79% by way of a repo auction while a further amount of Rs. 1.14 b was seen been deposited at CBSL’s repo window of 7.00%.
Rupee continues to lose ground
Demands for spot next contracts saw the rupee (spot contacts) lose ground once again yesterday to levels of Rs. 131.55/60 on the back of importer interest. Spot next contracts were seen changing hands within the range Rs. 131.60 – 131.70. The total USD/LKR traded volume for the previous day (16 July 2013) stood at US$ 50.25 million. Given are some forward dollar rates that prevailed in the market: one month – 132.33; three months – 134.00; six months – 136.13.
