Expected lower inflation, cut in fuel tariffs see secondary market bond yields dip sharply
Friday, 23 January 2015 00:00
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By Wealth Trust Securities
Secondary market bond yields were seen decreasing across the board with the reduction of fuel tariffs which in turn could lead to lower inflation. Activity surrounding the liquid maturities such as the 01.04.2018, 15.08.2018, 01.07.2019 and 01.07.2022 was considerably high as yields decreased to intraday lows of 7.00%, 7.05%, 7.02% and 7.50% as against the opening levels of 7.15%, 7.20%, 7.20% and 7.80%.
Furthermore the 15.05.17 traded within a range of 7.10% and 6.95% and the 01.05.2021 was quoted between the levels of 7.45% to 7.60%.
In secondary bill markets, the April 2015 maturity and the 364 day bill were quoted at levels of 5.78%-5.82% and 6.00%-6.10% respectively.
In the money market, the Central Bank - Open Market Operations (OMO) Department was seen mopping up excess liquidity by way of a term repo auction and outright sale of its Treasury bill holdings. The term repo auctions consisting of three maturities drained out a total amount of Rs. 81.50 billion at yields of 6.00% for 35 days, 5.96% for 56 days and 5.99% for 77 days, while a further amount of Rs. 6 billion was mopped up through the 42 and 70 day Treasury bill sale. The weighted averages of these were 5.74% and 5.78% respectively. This led to the overnight call money and repo rates remaining steady at average rates 5.81% and 5.17% respectively.
Rupee dips further
The rupee on spot next contracts dipped further yesterday to close the day at Rs. 132.95/00 on the back of importer demand. The total USD/LKR traded volume for the 21 January 2015 was US $ 79.83 million.
Some of the forward USD/LKR rates that prevailed in the market were one month - 133.45; three months -134.60 and six months - 135.90.
