Secondary market treasury yields edge up as liquidity remains in the red

Continued selling pressure remained on secondary market Treasury bonds yesterday as liquidity in the system remained at a net negative amount of Rs 5.5 Billion for a second consecutive day, Wealth Trust Securities said.

It said Central Bank injected an amount of Rs 3.5 Billion by way of a reverse repo auction at a weighted average of 9.65% through its Open Market Operation (OMO). A further amount of Rs 2.1 Billion was accessed by market participants at its discount window rate of 9.75%.

The 3 year bond reflected the most amount of activity as its yield edged up by around 3 basis points to an intraday high of 13.95% while limited amount of activity was witnessed on the 18 ½ month bond and the 5 year bond at levels of 13.80% and 14.36% respectively.

Wealth Trust also said the Public Debt Department (PDD) of Central Bank announced in total an amount of Rs 13 Billion for its weekly Treasury bill auction to be held today. Rs 4 Billion each and Rs 5 Billion is been offered on the 91 day, 182 day and 364 day maturities respectively.

 At last week’s auction weighted averages increased by 5 bp each on the 91 & 182 day maturities to 11.41% & 13.07%, while the weighted average on the 364 day maturity increased by 4 bp to 13.31%.

In Forex markets the rupee dipped marginally by around 8 cents to an intraday low of Rs 132.33 yesterday due to demand for contracts value cash (4/9/12) and tom (5/9/12). It opened trading at Rs 132.25 as forward dollar premiums for 3 month and 6 months edged up by 10 cents and 20 cents respectively as well.  The total dollar/rupee volume for the 03rd of September 2012 was at US $ 35.5 million. Given below are some forward dollar rates that prevailed in the market,  1 Month - 133.61; 3 Months- 136.11 and  6 Months- 139.71