Secondary market direction mixed as bids for 91 day bill rejected at weekly auction

Thursday, 6 December 2012 01:09 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

Despite all bids for the benchmark 91 day Treasury bill been rejected for the first time in six weeks at its weekly Treasury bill auction held yesterday, Central bank’s total requirement of Rs.15 Bn was all but met by the demand for the 182 day and 364 day maturities as weighted averages increased by only one basis points (bp) each to 12.10% and 12.86% respectively.

In line with the outcome of the auction, buying pressure in secondary bill markets saw the 182 day and 364 day bills been traded well below its weighted average at levels of 11.96% to 12.00% and 12.80% to 12.83% respectively. However in contrast to the secondary bill market, yields at the secondary bond market reflected an increase mainly on the more liquid five year and six year durations. The six year maturity reflected the sharpest increase of 15 bp to an intraday high of 13.10% while the five year maturity increased by 10 bp to 12.60%.

Liquidity returns to a surplus

Money market liquidity on an overnight basis reflected a turnaround to a surplus after laps of three days as Central Bank conducted a repo auction for the first time in two weeks in order to drain out Rs. 2.85 billion at weighted average rate of 9.34%. However an amount of Rs 1.31 Bn was accessed from CBSL’s discount window of 9.75%, bringing liquidity to a net surplus of Rs 4.65 Bn yesterday as a further Rs 3.11 Bn was deposited at its repo window of 7.75%. This intern helped overnight call money and repo rates remained steady to average 10.54% and 9.65% respectively.

Rupee dips but remains below Rs.129

The rupee lost ground by around 40 cents yesterday to close the day at Rs.128.70 on the back of buying interest on forward dollar contracts. The total dollar/rupee volume for the previous day (04-12-12) was US $ 28.67 million.