Secondary market bond yields edge up for a second consecutive day ahead of weekly auction

By Wealth Trust Securities

Secondary market bond yields closed the day marginally higher yesterday in comparison to its previous day’s closings ahead of today’s weekly Treasury bill auction. At today’s auction, a total amount of Rs. 12 billion is on offer, lower than last week’s total amount of Rs. 13 billion.

At last week’s auction, all three weighted averages (WAvg) dipped across the board for the first time in three weeks, with the 182 day bill WAvg reflecting the sharpest decline of 9 basis points (bp) to 9.81%. The 91 day WAvg dipped by 3 bp to 8.70%, while the 364 day reflected a drop of 1 bp to 10.85%.

Once again, activity revolved around the two liquid five year maturities (i.e. 1.4.18 and 15.8.18) as it hit intraday highs of 11.12% and 11.16% respectively in morning hours of trading.

However, buying interest at these levels saw yields dip once again to close the day at levels of 11.10/11 and 11.14/15. In addition, a limited amount of activity was witnessed on the four year maturity as well at levels of 11.00%.

In money markets yesterday, overnight call money and repo rates remained steady to average 8.50% and 8.17% respectively as surplus liquidity stood at Rs. 12.03 billion. The Open Market Operations (OMO) department of Central Bank drained an amount of Rs. 9.18 billion at a weighted average of 7.74% by way of an overnight Repo auction.

Rupee dips to a three month low

In Forex markets, the USD/LKR rate dipped to a three month low of Rs. 127.85 yesterday on the back of demand for the greenback and a strengthening of the dollar in international markets against all other currencies. However, the rupee gained some of its lost ground once again to close the day at levels of Rs. 127.65/75. The total USD/LKR traded volume for the previous day (10.06.13) stood at US$ 35.67 million. Following are some forward dollar rates that prevailed in the market: One month – 128.55, three months – 130.10 and six months – 132.30.