Momentum remains positive ahead of weekly bill auction

By Wealth Trust Securities 

The positive momentum in the secondary bond market continued ahead of the weekly Treasury bill auction due today with yields on the liquid maturities of 1 September 2023 and 1 August 2025 hitting intraday lows of 9.70% and 10.30% respectively against its days opening highs of 9.90% and 10.40%. 

However selling interest at these levels curtailed any further downward movement as yields was seen closing the day marginally higher against its intraday lows once again. 

In addition, a limited amount of activity was witnessed on the two 2021 maturities (i.e. 1 May 2021 and 1 August 2021) within the range of 9.65% to 9.85%, the 01.01.29 and 15.05.30 within 10.80% to 10.85% each and the 15.03.35 and 01.01.41 at 10.80%. 

Furthermore, on the short end of the yield curve, bond maturities just below 364 days were seen changing hands within the range of 7.75% to 7.85% as well.

Meanwhile, today’s weekly Treasury bill auction will see an total amount of Rs.24 billion on offer consisting of Rs.12 billion each on the 182 day and 364 day maturities while the 91 day maturity will not be auction for the first time in eight weeks. 

At last week’s auction, weighted averages increased across the board to record 6.78%, 7.06% and 7.48% respectively on the 91 day, 182 day and 364 day maturities. 

Meanwhile in money markets yesterday, overnight call money and repo rates increased further to average 6.83% and 6.79% respectively despite the Open Market Operations (OMO) Department of Central Bank infusing an amount of Rs. 3  billion on an overnight basis at a weighted average of 6.75% by way of a reverse repo auction. Surplus liquidity in the system increased to Rs.28.76 billion from its previous days 12-month low of Rs. 10.62 billion.

Rupee remains steady

 The USD/LKR rate on spot contracts was seen closing the day mostly unchanged yesterday at Rs. 144.00/15 subsequent to hitting intraday high of Rs. 143.85. 

The total USD/LKR traded volume for 18 January was $ 62.85 million.

Given are some forward USD/LKR rates that prevailed in the market: one month – 144.45/90; three months – 145.65/00; six months – 147.55/90.