Secondary market bond yields edge up marginally, policy rates hold steady for fifth consecutive mont

Wednesday, 21 May 2014 00:11 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Activity in secondary bond markets picked up yesterday as yields were seen edging up mainly on the belly end of the yield curve following the monetary policy announcement for the month of May at where the Central Bank was seen holding its standing facility rates (6.50% & 8.00%) steady at multi year lows for a fifth consecutive month. Yields on the liquid two 2018 maturities (i.e. 01.04.2018 & 15.08.18) were seen increasing to highs of 8.55% and 8.63% respectively followed by the five year maturity of 1 July 2019 to a high of 8.99% against its previous day’s closing levels of 8.46/50, 8.55/60 and 8.95/97. In addition, a limited amount of activity was seen on the shorter end of the curve with 2015, 2016 and 2017 maturities changing hands within the range of 7.18% to 7.23%, 7.55% to 7.60% and 8.02% to 8.06% respectively. The Open Market Operations (OMO) department of the Central Bank was seen mopping up an amount of Rs. 5.0 billion on a three day basis at a WAvg of 6.60% as surplus liquidity in money markets dipped to Rs. 9.32 billion yesterday. The overnight call money and repo rates remained steady to average 6.95% and 6.54% respectively. Rupee holds steady The USD/LKR rate remained steady to close the day unchanged at Rs. 130.38/40 yesterday as markets were at equilibrium. The total USD/LKR traded volume for the previous day (19 May 2014) stood at $ 86.05 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 130.85, 3-Months: Rs. 131.85 and 6-Months: Rs. 133.35.

Rupee ends steady on state bank’s dollar buying

REUTERS: The rupee ended steady for a third straight session on Tuesday as a state bank bought dollars to offset upward pressure from exporter dollar conversions, while dealers expected pressure on the local currency to continue. Dealers expect the currency to rise, if the Central Bank allows, fed by steady inflows in the absence of strong demand for imports and credit. The rupee ended at Rs. 130.35/40 per dollar, unchanged from Monday’s close. Dealers said one of the two state banks, through which the Central Bank directs the market, bought dollars. “The rupee is appreciating. There are (dollar) conversions. But as long as the state banks on behalf of the Central Bank are buying, you won’t see it on the exchange rate,” said a currency dealer. Dealers said the Central Bank had been preventing the appreciation over the last few weeks as steady inflows pressured the currency upward amid dampened demand for private sector credit and imports. While maintaining the policy rate for the fourth straight month on Tuesday, the Central Bank said it expected to introduce a new guarantee scheme for gold loans to boost credit growth that hit a four-year low in March. Despite a multi-year low interest rate regime, data showed private sector credit grew at a four-year low of 4.3% in March from a year earlier, while imports in February fell 6.2% on the year. Dealers expect the rupee to face upward pressure until credit growth and imports reverse the trend. On Monday, Central Bank Governor Ajith Nivard Cabraal said private sector credit growth would pick up to around 15% by end-2014 and continue to improve through 2016.