Downward trend persists ahead of weekly bill auction

By Wealth Trust Securities

The secondary bond market continued to be very active yesterday as yields were seen declining for a fourth consecutive day. 

The liquid maturities of 1 May 2020, 1 August 2021, 15 March 2025, 1 June 2026 and 15 May 2030 were seen hitting intraday lows of 11.70%, 11.80%, 12.10%, 12.20% and 12.40% respectively against its previous day’s closing levels of 11.93/00, 12.03/13, 12.20/35, 12.35/45 and 12.45/55. In addition, 2018 maturities (i.e. 1 April 2018 and 15 August 2018) and the 1 January 2024 maturity were seen changing hands within the range of 10.75% to 10.85% and 12.10% to 12.25% respectively.

In secondary bill markets, durations centering the 364 day and 182 day maturities were quoted at levels of 9.90/20 and 9.40/60 respectively. At today’s weekly bill auction, a total amount of Rs.20 billion will be on offer consisting of Rs.6 billion each on the 91 day and 182 day maturities and Rs.8 billion on the 364 day maturity. At last week’s auction, the weighted averages increased across all three maturities to 8.90%, 9.76% and 10.64% respectively.

Meanwhile in money markets, overnight call money and repo rates remained mostly unchanged to average at 8.14% and 8.18% respectively as the Open Market Operations (OMO) department of Central Bank was seen injecting an amount of Rs. 50 billion yesterday at a weighted average of 7.98% by way of an overnight reverse repo auction. The net market deficit stood at Rs.57.17 billion with Rs.22.48 being deposited at CBSL’s Standing Deposit Facility Rate (SDFR) of 6.50%.

Upward trend in rupee continues  

 Meanwhile in Forex markets, the active spot next contract appreciated further yesterday to close the day at Rs.144.60/80 against its previous day’s closing level of Rs.145.00/10 while spot contracts were traded at Rs.143.90/00. The total USD/LKR traded volume for 2 April was $ 89.75 million. 

Some of the forward USD/LKR rates that prevailed in the market were: one month – 145.45/55; three months – 147.15/25; and six months – 149.60/75.