Increase in liquidity leads to a dip in secondary market bond yields

By Wealth Trust Securities

The secondary bond market remained active yesterday as yields were seen dipping considerably following an increase is market liquidity to over a six week high. 

Buying interest on the liquid maturities of 1 June 2018, 15 September 2019, 1 May 2020, 1 August 2021, 15 October 2021, 1 October 2022 and 1 September 2023 saw its yields dip to intraday lows of 7.88%, 8.10%, 8.40%, 8.90%, 9.08%, 9.22% and 9.47% respectively against its days opening highs of 8.00%, 8.25%, 8.50%, 9.08%, 9.15%, 9.35% and 9.60%. However profit taking at these levels curtailed any further downward movement. 

In secondary bill markets, durations centering the October 2015 maturities were seen quoted within the range of 6.18/22% yesterday. 

Meanwhile in money markets, overnight call money and repo rates decreased marginally to average 6.13% and 5.90% respectively as surplus liquidity remained high of Rs. 98.77 b yesterday. 

Rupee remains steady 

The dollar/rupee rate on spot contracts remained unchanged to close the day at Rs. 133.80 for a fourth consecutive day. The total USD/LKR traded volume for the previous day (15 July) stood at $ 42.33 million. 

Some of the forward dollar rates that prevailed in the market were one month – 134.40/55; three months – 135.45/60; and six months – 137.00/15.