Liquidity down to more than a two week low ahead of weekly auction

Wednesday, 12 March 2014 01:04 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

In money markets, surplus liquidity dipped to an eighteen day low of Rs. 5.18 billion yesterday as the Central Bank refrained from conducting any auctions under its Open Market Operations (OMO) ahead of today’s weekly Treasury bill auction. At today’s auction, the total offered amount will be Rs. 10 billion consisting of Rs. 0.5 billion on the 91-day maturity, Rs. 1 billion on the 182-day maturity and Rs. 8.5 billion on the market favourite 364-day maturity. At last week’s auction, a total amount of Rs. 27.07 billion was accepted against its initial total offered amount of Rs. 18 billion at where weighted averages reflected declines of one basis point (bp) each on the 91-day and 182-day maturities to levels of 6.71% and 6.88% respectively. However the weighted average on the 364-day maturity was unchanged for the first time in four weeks at 7.07%. Overnight call money and repo rates remained steady to average 6.96% and 6.44% respectively. In secondary bond markets, activity continued to surround the liquid two 2018 maturities (01.04.2018 and 15.08.18) as selling interest during morning hours of trade saw its yields increase to daily highs of 8.89% and 8.95% respectively from its opening levels of 8.80/85 and 8.88/92. However, buying interest towards the latter part of the day saw yields close the day mostly unchanged once again at levels of 8.80/82 and 8.90/92 respectively against its previous day’s closing levels. In addition, 1 November 2019 maturity was seen changing hands within the range of 9.30% to 9.40% as well.

Rupee appreciates to a four and a half month high In Forex markets, the rupee appreciated to a four and a half month high of Rs. 130.50 yesterday in morning hours of trade on the back of inward remittances and export conversions outweighing importer demand but closed the day unchanged once again at levels of Rs. 130.55/57. The total USD/LKR traded volume for the previous day (10 March 2014) stood at $ 110.00 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.11, 3-Months: Rs. 132.06 and 6-Months: Rs. 133.54.