Primary and secondary Treasury markets open 2014 on a positive note
Thursday, 2 January 2014 00:00
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By Wealth Trust Securities
The sharp reduction in inflation for the month of December, the final outcome of the weekly Treasury bill auction conducted yesterday and speculation of the outcome of today’s monitory policy announcement saw secondary bond markets continue its bullish trend at the start of the year. Activity remained high as yields on the liquid two four year maturities (i.e. 01.04.2018 and 15.08.18) were seen dipping below the psychological level of 9.00% for the first time in two years to record lows of 8.83% and 8.88% respectively against their previous day’s closing levels of 9.40/43 and 9.45/48, closely followed by the five year maturity of 15.01.2019 dipping to a daily low of 9.00% against its opening levels of 9.55/65. However selling pressure along with profit taking towards the later part of the day saw yield close marginally higher.
At yesterday’s weekly auction, weighted averages (WAvg’s) declined for a 15th consecutive week as substantial demand for the 364 day bill, the highest in 50 weeks saw its WAvg decline by 34 basis points (bp) to a 27 month low of 7.95% followed by the 182 day bill by 31 bp to 7.53% and the 91 day bill by 12 bp to 7.42% to record 27 month lows as well. An total of Rs 20.41 billion (Bn) was accepted at the auction against its initial total offered amount of Rs 15 Bn with the 364 day bill representing 75% of this volume.
Meanwhile, in secondary bill markets, continued demand for the 182 and 364 day bills and duration centering it subsequent to the auction saw it change hands below its respective WAvgs. Given below are the closing, secondary market yields for the most frequently traded maturities,
Meanwhile in money markets, overnight call money and repo rates remained steady to average 7.68% and 7.01% respectively as net surplus liquidity increased to Rs 34.90 Bn yesterday. An amount of Rs.34.91 Bn was deposited at CBSL’s repo window of 6.50% as Central Bank continued to refrain from conducting any OMO auctions yesterday. Central Banks discount window of 8.50% was seen been accessed yesterday as well for amount of Rs.0.01 bn.
Rupee gains
Meanwhile in Forex markets yesterday, the USD/LKR rate closed the day marginally higher at Rs 130.70/75 against its previous day’s closing of 130.75/85. The total USD/LKR traded volume for the previous day (31-12-13) stood at US $ 35.71 million. Given below are some forward dollar rates that prevailed in the market; one month - 131.13; three months - 131.85; and six months - 133.23.
