Primary market rates continue to fall as demand remains unwearied

Thursday, 24 April 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The downward trend in weighted averages (WAvgs) continued at yesterday’s weekly Treasury bill auction as its total accepted amount nearly doubled its total offered amount of Rs. 7.5 billion.

It was the 364-day bill which dominated the auction as it represented 83% of the total accepted amount while the 91-day bill reflected the maximum decline of 3 basis points to 6.58%. The WAvg

on the 364-day bill decreased by 1 basis point for a third consecutive week to 7.02% while the 182-day bill WAvg remained unchanged at 6.79%. The acceptance of a higher volume on the 364-day maturity was seen as the main reason in curtailing a further drop in its WAvg according to market sources. However, contrary to the movement in primary markets, secondary market bond yields were seen increasing marginally subsequent to the release of the auction results reversing its opening downward trend witnessed mainly on the shorter leg of the yield curve. Once again activity surrounded the liquid two 2018 maturities (i.e. 01.04.2018 and 15.08.2018) and the 01.07.2019 maturity as it was seen hitting intraday highs of 8.74%, 8.85% and 9.10% respectively against it

morning lows of 8.72%, 8.83% and 9.06%. In addition, the 1 November 2015 maturity was seen changing hands within the range of 7.31% to 7.35% as well. In secondary bill markets the 364-day bill, which was quoted at levels of 7.00% to 7.05% pre-auction, was quoted at levels of 6.98% to 7.02% post auction while the 182-day bill was at 6.80/85. Meanwhile in money markets, overnight call money and repo rates remained steady to average 6.96% and 6.52% respectively as overall surplus liquidity stood at Rs. 20.90 billion yesterday. An amount of Rs. 15.50 billion was mopped up on a two day basis by way of a Repo auction at a WAvg of 6.58% while further an amount of Rs. 5.40 billion was deposited at CBSL’s Standing Deposit Facility Rate of 6.50%. Rupee remains stable The dollar/rupee rate remained mostly unchanged within the range of Rs. 130.62-Rs. 130.65 yesterday. The total USD/LKR traded volume for the previous day (22 April 2014) stood at $ 82.05 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.21, 3-Months: Rs. 132.24 and 6-Months: Rs. 133.89.

Rupee edges up on exporter dollar sales

REUTERS: The rupee ended a tad firmer on Wednesday, recovering from early losses on dollar sales by exporters in late trade. Dealers expect the local currency to remain stable until imports pick up sharply. The spot rupee, which had hit a low of Rs. 130.64 per dollar earlier in the day on importer demand, closed at Rs. 130.60/61, firmer than Tuesday’s close of Rs. 130.62/67. The Central Bank on Tuesday kept policy rates steady at multi-year lows, as expected and expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic expansion. Many dealers said they are surprised with lower credit demand from the private sector even though key interest rates are at multi-year lows since January. Private sector credit grew 4.4% year-on-year in February, the slowest since May 2010, latest data from the Central Bank showed. That compared with a growth of 5.2% in January this year and 13.3% in February 2013. The benchmark 91-day Treasury bill yield dropped 3 basis points to 6.58%, its lowest since January 2007 when the Central Bank made available data. Dealers expect the rupee to trade in a range of Rs. 130.60-70 in the near future. It has been hovering between Rs. 130.55 and Rs. 130.70 per dollar since 3 March, Thomson Reuters data showed, with the Central Bank intervening to smoothen any sharp volatility. There has been a gradual increase since mid-March in remittances by Sri Lankan expatriates to their relatives, while dollar selling has also increased as exporters pay bonuses to their employees. Those inflows have helped ease the depreciation pressure seen in the early part of the year.