Secondary market bond yields decrease for the first time in seven days

• Weekly averages increase across the board
• Rupee gains to a one week high

By Wealth Trust Securities Secondary market bond yields were seen decreasing for the first time in seven days yesterday due to buying interest leading to the weekly bill auction and following the outcome of the auction as well. The weighted averages at the weekly bill auction were seen increasing by only three basis points each on the 91 day and 182 day maturities to 5.79% and 5.89% respectively and four basis points on the 364 day maturity to 6.04% against market expectations of a greater increase. A total amount of Rs. 19.78 billion was accepted against total bids of Rs.44.15 billion received as Rs. 15 billion in total was offered.   Activity was seen increasing in secondary bond markets as yields were seen decreasing yesterday mainly on the liquid maturities of 01.04.2018, 15.08.2018, 01.07.2019 and 01.07.2022 to intraday lows of 7.35%, 7.40%, 7.60% and 8.02% respectively against their previous day’s closing levels of 7.90/95, 7.90/05, 7.95/08 and 8.35/40. In addition, a limited amount of activity was witnessed on the 01.05.2021 maturity as well within the range of 7.90% to 8.20%. In secondary bill markets, the 364 day bill was quoted within the range of 6.00% to 6.10%, post auction. In money markets, Overnight call money and repo rates increased marginally to average 6.02% and 5.29% respectively as all commercial banks were seen squaring off their books yesterday. Surplus liquidity stood at Rs 17.76 billion with the Central Bank refraining from conducting any auctions under its Open Market Operations (OMO) for second consecutive day.   Rupee appreciates to a one-week high The rupee on both spot next and next-next contracts was seen appreciating to a one-week high yesterday to close the day at Rs.132.35/50 and Rs.132.35/55 respectively in comparison to its previous days of Rs.132.75/77 and Rs.132.75/85 on the back of export conversions and selling interest on forward dollar contracts. The total USD/LKR traded volume for the 12 January 2015 was US $ 30.50 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 132.95; 3 Months - 133.95 and 6 Months - 135.25.