Parallel shift upwards of yield curve witnessed during the week

By Wealth Trust Securities

The slower pace of reduction on Treasury bill weighted averages at its weekly auction coupled with profit taking saw secondary market bond yields increase during the week, reflecting a parallel shift upwards of the overall yield curve for the first time in four weeks. Selling interest on the liquid maturities of 01.07.19, 01.05.20, 15.12.21, 01.07.22, 01.09.23, 01.08.24 and 01.08.26 saw its yields increasing to weekly highs of 11.30%, 11.40%, 11.50%, 11.65%, 11.70%, 11.75% and 11.73% respectively against its previous weeks closing levels of 11.05/15, 11.10/35, 11.40/45, 11.40/50, 11.45/55, 11.48/55 and 11.55/60. In addition, the 15.50.30 maturity was seen edging up to 11.97% as well.

However, the foreign holding in Rupee bonds continued to increase, recording a 43 week high inflow of Rs. 11.34 billion for the week ending 17 May with its total outstanding increasing to Rs. 215.21 billion.

The daily secondary market Treasury bond transacted volumes for the first four days of the week averaged Rs. 35.4 billion.

In money markets, net liquidity was seen increasing towards the latter part of the week as the OMO Department of the Central Bank of Sri Lanka was seen conducting overnight Repo auctions in order to drain out liquidity at a weighted average ranging from 7.28% to 7.29% against overnight Reverse repo auctions conducted during the early part of the week at 8.75%.  The overnight call money and repo rates averaged 8.75% and 8.80% respectively, for the week.

Rupee dips 

during the week 

The rupee on the active spot next contracts depreciated during the week to close the week at Rs. 152.95/00 against its previous weeks of Rs. 152.55/65 on the back of importer demand.

The daily USD/LKR average traded volume for the four days of the week stood at $ 49.65 million.

Some of the forward dollar rates that prevailed in the market were one month – 153.95/10; three months – 155.95/20 and six months – 158.80/00.