Dull sentiment continues ahead of inflation announcement
Friday, 28 November 2014 00:55
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By Wealth Trust Securities
The dull sentiment in secondary bond markets continued yesterday as well with a limited amount of activity seen on the two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) and the five-year maturity of 1 July 2019, as its yields dipped marginally to lows of 7.10%, 7.20% and 7.27% respectively.
Similarly active quotes were seen on the 1 July 2022 and 1 January 2024 maturities as well within the range of 8.10%-8.15% and 8.20%-8.30% respectively. However, selling interest at these levels curtailed any further downward movement ahead of Inflation figures for the month of November, due today.
In money markets, the weighted average on overnight call money and repo rates remained unchanged to average at 6.00% and 5.50% respectively yesterday as surplus liquidity stood at Rs. 13.45 billion. Furthermore, the Open Market Operations (OMO) department of Central Bank was seen draining an amount of Rs. 41.33 billion by way of two term repo auctions for periods of 56 days and 77 days at a single weighted average of 6.03%.
Rupee gains marginally
The dollar/rupee (USD/LKR) rate on spot next-next contracts (Four day forwards) was seen appreciating to close the day at Rs. 131.65/75 yesterday against its previous day’s closing of Rs. 132.25/50. The total USD/LKR traded volume for 26 November was at $ 38.70 million. Some of the forward dollar rates that prevailed in the market were: three months – 132.78 and six months – 134.13.
Rupee forwards firmer on dollar sales by banks, exportersReuters: rupee forwards gained on Thursday as exporters sold dollars after being away from the market recently due to the local currency’s weakness, and as banks offloaded the green back to cover short positions.
Importers stayed on the sidelines as moral suasion by the Central Bank left spot rupee untraded.
The rupee and three-day forwards, or spot-next, were not traded after the Central Bank capped the currency at predetermined levels to prevent volatility.
Central Bank officials were not available for comment.
Dealers said four-day forwards, or spot-next-next, were actively traded and ended firmer at 131.65/75 per dollar, up from Wednesday’s closing level of 132.25/35.
“There were no importers in the market as the rupee was too expensive after falling in the last few days. We have seen some exporters and banks selling dollars,” a currency dealer said.
Overseas investors bought a net Rs. 457.8 million worth of Government securities during the week ended 19 November. They sold a net Rs. 39.1 billion ($ 298.5 million) in the eight weeks through 19 November, data from the Central Bank showed.
