Primary market weighted averages nose dive

By Wealth Trust Securities

The weighted averages at yesterday’s Treasury bond auctions were seen decreasing considerably in comparison to its previously recorded averages at its auctions conducted on 29 July 2016. 

The 7.11-year maturity of 01.08.2024 recorded the sharpest drop of 37 basis points to 12.24%, closely followed by the 9.11-year maturity of 01.08.2026 by 34 basis points to 12.52% and the 4.06-year maturity of 01.03.2021 by 31 basis points to 11.76%. The total accepted amount stood at Rs. 49.4 billion against its total offered amount of Rs. 45 billion.

Activity in the secondary bond market increased drastically yesterday following the auction outcome as yields dipped further. The auction maturities were seen dipping to intraday lows 11.70%, 12.10% and 12.35% respectively against its days opening highs of 11.85%, 12.23% and 12.50%. 

In addition, the 15.03.2025 maturity was seen changing hands within the range of 12.30% to 12.38% during the day while on the short end of the curve, the 15.09.2019 dipped to a low of 11.40%. 

Meanwhile, in money markets, the net liquidity shortfall in the system decreased to over a seven-week high of Rs. 1.32 billion yesterday as overnight call money and repo rates remained mostly unchanged to average 8.40% and 8.50% respectively. An amount of Rs. 10 billion was injected on an overnight basis at a weighted average of 8.42% by the OMO department of the Central Bank. 

Rupee depreciates  

The active spot next as well as the one week forward contract was seen depreciating yesterday to close the day at Rs. 145.80/90 and Rs. 146.00/10 respectively against its previous day’s closing of Rs. 145.58/62 and Rs. 145.75/80 on the back of importer dollar demand outweighing export conversions. The total USD/LKR traded volume for 24 August 2016 was $ 60.05 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 146.65/70; three months - 148.30/45 and six months - 150.80/00.