Parallel shift upwards on yield curve for first time in 5 weeks

Monday, 18 August 2014 00:04 - - {{hitsCtrl.values.hits}}

Central Bank kept policy rates unchanged for 7th consecutive month By Wealth Trust Securities The overall activity increased towards the latter part of the week ending 15 August as yields were seen increasing gradually reversing a downward trend witnessed over the previous four weeks in line with the monetary policy announcement for the month of August, where the Central Bank kept its policy rates unchanged at 6.50% and 8.00% for the seventh consecutive month. This was despite weighted averages on all three bill maturities decreasing at its weekly primary auction, as the total

accepted amount continued to exceed the total offered amount. The overall yield curve witnessed a parallel shift upwards with the liquid maturities of 1 July 2019 and 1 July 2022 maturities hitting weekly highs of 7.40% and 8.35% respectively against its lows of 6.85% and 7.65%. The 10 year maturity of 1 January 2024 rising to 8.45% against 8.03% and the two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) pushing up to 7.40% against 6.75%. In addition, a considerable volume on shorter maturity of 15 May 2017 was seen changing hands within the range of 6.55% to 6.90% during the week. Meanwhile in money markets, Overnight call money and repo rates remained steady to average 6.71% and 6.55% respectively during the week as average surplus liquidity in the system dipped to Rs 27.39 billion in comparison to its previous week’s average of Rs. 32.58 billion. Rupee closes the week steady The two way quote on the rupee was seen fluctuating within a narrow range of Rs. 130.16-Rs. 130.23 during the week to close the week at Rs. 130.16/18 as the broader market was at equilibrium. The daily average USD/LKR traded volume for the first four days of last week was $ 59.69 million. Some of the closing forward dollar rates that prevailed in the market were: one month – 130.54; three months – 131.22; and six months – 132.22.