Outcome of weekly averages sees bond markets close on a positive note

• Liquidity increases to an eight week high

By Wealth Trust Securities The outcome of the weekly Treasury bill auction at where weighted averages were seen plunging below the psychological level of 7.00% once again across all three maturities reflected positively on secondary bond markets, as yields were seen dipping considerably towards the latter part of the week ending 20th March. Volumes changing hands increased during the week with activity spreading from the two year duration to the thirty year duration. A bulk of the activity centered on the 01.06.2018, 15.09.2019, 01.08.2021, 01.07.2022 and the 01.09.2023 maturities from weekly highs of 8.80%, 9.20%, 9.45%, 9.20% and 9.76% respectively to lows of 8.45%, 8.65%, 8.95%, 8.95% and 9.37%. Furthermore, continued buying interest in secondary market bills saw durations centering the 91 day, 182 day and 364 maturities being quoted at levels of 6.70/90, 6.80/95 and 6.90/00 respectively. Meanwhile in money markets, the Standing Lending Facility Rate (SLFR) of 8.00% was accessed for the first time in five weeks on Thursday and Friday for amounts of Rs.1.8 billion and Rs.1.1 billion respectively despite surplus liquidity remaining high during the week to average at Rs.70.36 billion and increasing to an eight week high of Rs 102.4 billion on Friday. In line with this, overnight call money and repo rates increased marginally during the week ending 13 March to average 6.69% and 6.73% respectively against its previous weeks averages of 6.68% and 6.29%. However, the Open Market Operations (OMO) Department was seen mopping up excess liquidity by way of five auctions for outright sales of Treasury bills as well. The auction drained an amount of Rs. 25 billion in total at weighted average of 6.56% for 04 days, 6.57% for 11 days, 6.50% for 25 days, 6.57% for 32 days and 6.70% for 46 days.   Rupee closes the week steady In Forex markets, the USD/LKR rate on one week and two week forward contracts were seen closing the week steady at Rs.133.60/70 and Rs.133.85/95 respectively while spot quotes remained stagnant at Rs.132.90/20. The daily average USD/LKR traded volume for the first four trading days of the week stood at US $ 52.16 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 134.30; 3 Months - 135.40 and 6 Months - 137.30.