Positive sentiment continues for a second consecutive week

By Wealth Trust Securities

The positive sentiment in the secondary bond market continued for a second consecutive week ending 3  June, mainly on the short end of the yield curve. Considerable buying interest on the 2018 maturities (i.e. 15.10.18 and 15.11.18), the 01.05.2020 and 15.10.2021 saw its yields dip to weekly lows of 11.30%, 11.65% and 11.95% respectively against its weeks opening highs of 11.65%, 11.90% and 12.20%. Furthermore on the belly end of the yield curve, the liquid 01.01.2024 and 01.06.2026  maturities saw it change hands within weekly lows of 12.31% and 12.42% respectively to highs of 12.52% and 12.65% as the yield curve witnessed a steepening trend during the week. In addition, a limited amount of activity was witnessed on the 15.05.2030 maturity within a thin range of 12.50% to 12.55% as well. Nevertheless, the foreign holding in Rupee bonds was seen dipping for the first time in four weeks to record an outflow of Rs.11.05 billion for the week ending 1 June. Meanwhile in money markets, the overnight call money and repo rates averaged at 8.16% and 8.01% respectively for the week as the OMO (Open Market Operation) department of the Central Bank injected funds at weighted averages ranging from 7.98% to 7.99% during the latter part of the week. The net surplus liquidity in the system dipped to Rs.6.99 billion for the week.

Rupee appreciates during the week

 The Rupee on its spot next contract was seen appreciating during the week to close the week at Rs.147.10/30 against its previous weeks closing of Rs.147.55/60, subsequent to hitting a weekly low of Rs.148.20 on the back of dollar selling interest outweighing importer demand. The daily USD/LKR average traded volume for the first three four days of the week stood at $ 61.38 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 147.90/00; 3 Months - 149.60/70 and 6 Months - 151.80/00.