Secondary market bond yields increase to pre rate cut levels

Friday, 21 June 2013 04:26 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Foreign selling on rupee bonds was seen as the main reason for the upward movement in secondary market bond yields yesterday, as it hit levels last seen prior to 10 May 2013 policy rate cut of 50 basis points (bp). Once again, activity centered on the two liquid five year maturities (i.e. 1.4.2018 and 15.8.2018) as its yields increased by 10 bp during the day from intraday lows of 11.25% and 11.28% respectively to intraday highs of 11.35% and 11.38%. However, buying interest at these levels curtailed the upward movement as it closed the day lower once again as volumes traded remained very

high. In addition, the eight year maturity was seen been quoted at levels of 11.60/70 while the 364 day bill closed the day at levels of 10.75/83 in secondary markets. In money markets yesterday, the average overnight call money and repo rates continued to remain steady at 8.54% and 8.14% respectively as overnight surplus liquidity dipped marginally to Rs. 14.94 billion. The Open Market Operations (OMO) department of Central Bank drained an amount of Rs. 12.98 billion from the system at a weighted average of 7.79% by way of an overnight Repo auction while a further Rs. 1.96 billion was deposited at its repo window rate of 7.00%. Rupee loses ground once again In Forex markets, the rupee lost ground once again to close the day at Rs. 128.40/128.50 on the back of foreign selling on rupee bonds in comparison to its previous day’s closing levels of Rs. 127.95/128.05. The total USD/LKR volume for the previous day (19.06.13) stood at US$ 60.25 million. Given are some forward dollar rates that prevailed in the market: One month – 129.22, three months – 130.60, six months – 132.60.