Secondary market bond yields dip ahead of monitory policy announcement

By Wealth Trust Securities

Secondary market bond yields dipped across the yield curve yesterday ahead of today’s monitory policy announcement for the month of June which was brought forward from its original date of 14th June 2013. At last month’s policy meeting, Central Bank cut its policy rates by 50 basis points to 7.00% and 9.00% following its 25 basis points cut in December 2012. The liquid two five year maturities (i.e.01.04.2018 and 15.08.2018) took center stage once again as it reflected the bulk of the activity with its yields dipping to intraday lows of 11.03% and 11.08% respectively from its opening levels of 11.07% and 11.12%. In addition, activity on the longer leg of the yield curve was witnessed as well with the eight year maturity changing hands within the range of 11.43% to 11.47% during late hours of trading.

Furthermore considerable buying interest on secondary market bills saw durations centering around the 364 day bill change hands with the range of 11.75% to 11.85% as well.

Overnight call money and Repo rates dipped for a second consecutive day yesterday to average 8.42% and 8.21% respectively as surplus liquidity in money markets increased marginally once again to Rs 21.2 Bn.

The Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs 15 Bn from the system on an overnight basis at a weighted average of 7.61% in addition to mopping up a further Rs 6 Bn for a period of seven days at a weighted average of 7.86%.

Rupee gains for a third consecutive day

The USD/LKR rate gained for a third consecutive day to close the day at Rs 126.35/40 against its opening level of Rs 126.45 on the back of export conversions and a dip in forward dollar premiums.