Downward trend in bond yields continue ahead of monetary policy announcement

By Wealth Trust Securities

Secondary bond market yields continued to decline for a fourth consecutive day ahead of today’s monetary policy announcement, which is due at 7.30 a.m., the fourth for this year. 

Yields of the two liquid 2021 maturities (i.e. 01.08.21 and 15.12.21), two 2023 maturities (i.e. 15.05.23 and 01.09.23), two 2024 maturities (i.e. 01.01.24 and 01.08.24) and 01.08.26 were seen dipping to daily lows of 11.24%, 11.27%, 11.35%, 11.37%, 11.40% and 11.44% respectively, backed by  local and foreign buying. 

Furthermore, the 15.01.19, 01.07.19, 01.03.21, 15.10.21, 01.07.22 and 15.05.30 maturities were seen changing hands at lows of 10.55%, 10.73%, 11.20%, 11.31%, 11.35% and 11.70% respectively.

The Monetary Board of the Central Bank of Sri Lanka increased its policy rates by 25 basis points at the monetory policy meeting held in March 2017.

The total secondary market Treasury bond transacted volume for 21 June 2017 was Rs. 9.95 billion.

Meanwhile, in money markets, the overnight call money and repo rates remained steady to average 8.75% and 8.80% respectively as the OMO (Open Market Operations) Department of the Central Bank of Sri Lanka was seen injecting an amount of Rs. 18.70 billion on an overnight basis by way of a Reverse Repo auction at a weighted average of 8.75%. The net liquidity shortage decreased once again to Rs. 25.34 billion.

Rupee appreciates 

 In the Forex market, the USD/LKR rate on spot contracts was seen appreciating marginally to close the day at Rs. 153.20/30 in comparison to the previous day’s closing levels of Rs. 153.33/38 on the back of exporter conversions.

The total USD/LKR traded volume for 21 June 2017 was $ 76.20 million.