Reuters: The rupee ended steady for a third straight session on Tuesday in dull trade as a State-run bank sold dollars at 133.60 to keep the currency flat, dealers said.

Three-month rupee forwards ended steady at 135.30/40 per dollar as inward remittances offset importer dollar demand.

However, six-month forwards ended slightly weaker at 136.85/95, compared with Monday’s close of 136.80 as a foreign bank converted some dollars to buy rupee-denominated treasury securities, dealers said.

On Thursday, the State bank, through which the Central Bank usually directs the market, lowered the dollar selling rate by 10 cents from the previous session’s close of 133.70.

“Everybody is on a wait and see mode due to political uncertainty before the upcoming elections,” a currency dealer said on condition of anonymity.

The currency has appreciated 0.45% since it hit a record low of 134.20 on June 18. However, currency dealers and analysts are wary of whether the Central Bank can sustain the rupee’s appreciation trend as import demand could pick up due to lower interest rates.

The pressure on the currency also could build up if exporters stop selling dollars until the elections are over.

President Maithripala Sirisena dissolved Parliament on 26 June and scheduled the election for 17 August, in an effort to consolidate power and push through political reforms, ending a months-long deadlock.

Political analysts do not see a clear winner in the elections as yet.

Secondary market bond yields broadly steady ahead of weekly auction

By Wealth Trust Securities

The secondary bond market continued to remain lackluster yesterday as yields were seen closing the day broadly steady. 

A very limited amount of activity was witnessed on the 1 June 2018, 15 September 2019 and 1 September 2023 maturities at levels of 7.73% to 7.75%, 8.10% and 9.10% respectively. 

Today’s weekly Treasury bill auction will see an total amount of Rs. 22 billion on offer consisting of Rs. 8 b on the 91 day bill, Rs. 6 b on the 182 day bill and Rs. 8 b on the 364 day bill respectively. 

At last week’s auction, weighted averages on the 91 day and 182 day bills were seen increasing by three basis points each to 6.11% and 6.21% respectively while the 364 day remained unchanged at 6.28%.

Overnight call money and repo rates continued to remain steady at 6.15% and 5.94% respectively yesterday as surplus liquidity stood at Rs. 68.559 billion.

Rupee stagnant

The USD/LKR rate on spot contracts remained stagnant at Rs. 133.60 for a fifth consecutive day yesterday. 

Some of the forward dollar rates that prevailed in the market were one month – 134.18/25; three months – 135.20/35; and six months – 136.85/95.