Secondary market activity increases as yields dip considerably

By Wealth Trust Securities

The point to point inflation for March reflected a deceleration considerably more than the market expected to 7.5% in comparison to its last month figure of 9.8%. However, the annualised average increased further to a high of 8.80% from the previous month’s 8.60%. In line with the drop in point to point inflation, the  secondary market Treasury bond yields dipped to a daily low of 11.12% and a high of 11.40% on the liquid two five year maturities (i.e. 1.4.2018 and 15.8.2018).

Furthermore, the 364 day bill which was quoted levels of 11.35%-11.45% prior to the inflation announcement closed at levels of 11.25%/11.40%.

Meanwhile in the money market, surplus liquidity on an overnight basis increased further to Rs. 38.38 billion with an amount of Rs. 22.70 billion been mopped up from the system on an overnight basis by way of a Repo auction conducted by the Open Market Operations (OMO) Department of the Central Bank at a WAvg of 8.35%.

The overnight call money and repo rates remained mostly unchanged to averaged 9.44% and 8.58% respectively. Liquidity is expected to increase following a bond maturity due on 1 April 2013 for an amount of Rs. 80.2 billion.

Rupee remained stable

In Forex markets, the USD/LKR rate remained steady, to close the day at Rs. 126.80/126.85. The total USD/LKR traded volume for the previous day (27.3.13) stood at US$ 93.41 million. Following are some forward dollar rates that prevailed in the market: One month – 127.93, three months – 130.03 and six months – 133.05.