Secondary bond market activity dries up once again

By Wealth Trust Securities

Activity in secondary bond markets dried up yesterday as yields remained steady with two way quotes mainly seen on the liquid five-year maturities (i.e. 1 April 2018 and 15 August 2018) at levels of 11.35% - 11.38% and 11.42%-11.45% respectively due to the “wait and see” approach by market participants ahead of this month’s monitory policy announcement due on 7 May. However demand for the 364-day bill continued as it changed hands at levels of 11.26% to 11.29% in secondary markets.

Money Market liquidity down to a one month low

Money market liquidity on an overnight basis dipped to a one month low of Rs. 16.31 billion yesterday with only an amount of Rs. 11.61 b being mopped up from the system on an overnight basis by way of a Repo auction conducted by the Open Market Operations (OMO) department of Central Bank at a WAvg of 8.35%.

 However overnight call money and repo rates remained mostly unchanged to averaged 9.46% and 8.62% respectively.

The dip in liquidity was mainly attributed to the continuous sell down of CBSL’s Treasury bill holdings according to market sources.

Rupee continued to appreciate further

In Forex markets, the rupee appreciated further by around 60 cents yesterday to close the day at Rs 126.10/20 in comparison to its previous day’s closing level of Rs.126.65/72 on the back of continued selling interest on forward dollar contracts.

 The total USD/LKR volume for the previous day stood at US$ 71.85 million.