Foreign selling drives up bond yields once again

Friday, 20 January 2017 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

Secondary market bond yields were seen edging up once again yesterday mainly on the short end to the belly of the yield curve on the back of foreign selling interest, reversing a downward trend witnessed over the previous two days.

Selling interest on the 01.07.19 and the 01.08.21 maturities saw its yields edge up to intraday highs of 11.90% and 12.33% respectively against its days opening lows of 11.85% and 12.25% while the 01.01.24 and the two 2026 (i.e. 01.06.26 and 01.08.26) maturities were seen changing hands within the range of 12.40% to 12.47% and 12.45% to 12.50% respectively. Furthermore, early 2018 maturities (i.e. 01.02.18 and 01.04.18) were seen changing hands within the range of 10.70% to 10.80% while the 15.01.19 changed hands at levels of 11.50% to 11.52% as well.

In money markets, the Open Market Operations department of the Central Bank was seen successfully draining out an amount of Rs 3.5 billion yesterday by way of outright sales of Treasury bills at weighted averages of 8.58% and 8.75% for 42 days and 49 days respectively.

In addition, a further amount of Rs. 67.92 billion was drained out on an overnight basis at a weighted average of 7.54% with the total surplus standing at Rs. 91.852 billion. Call money and repo remained steady to average 8.40% and 8.49% respectively.

Rupee continues to dip

The continued importer demand coupled with foreign selling in Rupee bonds saw the USD/LKR rate depreciate yesterday on its two weeks and one month forward contracts to lows of Rs. 151.05/10 and Rs. 151.50/60 respectively against its previous day’s closing Rs. 150.70/85 and Rs. 151.20/30. The total USD/LKR traded volume for 18 January 2017 was $ 117.70 million. Some of the forward USD/LKR rates that prevailed in the market were three months - 152.70/90 and six months - 155.10/30.