Secondary market yields fluctuate during the week amidst heavy volumes

Monday, 4 November 2013 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Continuing with the prevailing positive momentum in the market and the outcome of the weekly Treasury bill auction which reflected a decrease for a sixth consecutive week while accepting double its initial offered amount on the 364 day bill, activity in secondary bond markets remained high with yields treading downwards during the early part of the week. Positive sentiment supported

The positive sentiment was further supported by the outcome of the Treasury bond auctions, where all three maturities (i.e. 15 January 2019, 1 May 2028 and 1 November 2033) dipped to levels of 10.64%, 11.90% an 12.13% respectively against similar tenure maturities auctioned previously at WAvgs of 11.17%, 12.10% and 12.30%. The more liquid two five year maturities (1 April 2018 and 15 August 2018) reflected the highest amount of activity during the week to hit 10-month lows of 10.70% and 10.75% respectively in comparison to their last week’s closing levels 10.94/98 an 10.98/03 respectively. The yields on the maturities of 1 April 2016 and 1 January 2017 declined as well during the week to lows of 10.20% and 10.60% respectively. Nevertheless selling interest towards the latter part of the week due to profit taking coupled with the outcome of Inflation for the month of October which reflected an increase on its point to point to 6.7% from 6.2% earlier, saw yields edging up to close the week higher with the liquid two five years hitting weekly highs of 11.90% and 11.00% and the 1 April 2016 and 1 January 2017 to 10.38% and 10.65% respectively once again. Monetary policy announcement on 11 November Meanwhile the monetary policy announcement for the month of November was brought forward to 11 November. However, demand for secondary market bills continued during the week, mainly centring on the 364 day and 182 day maturities to change hands within the range of 9.78% to 9.82% and 8.90% to 9.10% respectively. Meanwhile in money markets, Overnight call money and repo rates remained resilient at levels of 7.75%-7.85% and 7.00%-7.10% respectively during the week as surplus liquidity in the system increased towards the later part of the week to close the week at Rs.32 billion. The Open Market Operations (OMO) Department of Central Bank was seen mopping up liquidity during the week by way of seven day term repo auctions at weighted averages ranging from 7.46% to 7.47%. Rupee stabilised during the week

The dollar rupee rate on spot contracts lost grounds during the early part of the week to a low of Rs. 131.10 on the back of importer demand. However it gained most of its lost ground during the latter part of the week to close the week at 130.95/00 as any further pressure on the USD/LKR rate was negated due to selling interest at levels of Rs. 131.00. The daily average USD/LKR traded volume for the first four days of the week was at US$ 33.24 million. Some of the forward dollar rates that prevailed in the market were: one month – 131.82; three – 133.48; and six months – 135.98.