Surge in liquidity leads to demand on shorter tenure maturities
Tuesday, 24 September 2013 00:00
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By Wealth Trust Securities
The increase in liquidity to a record 29 month high of Rs. 80 b on Friday due to the part conversion of the NSB dollar bond proceeds saw shorter tenure secondary market bill and bond yields dip yesterday for a third consecutive day mainly led by bills with durations closing in on the 91 day and 182 day maturities.
Late January 2014 bills was seen changing hands within the range of 9.30% to 9.50%, April 2014 bonds and bills within the range of 10.15% to 10.25%, June 2014 within the range of 10.45% to 10.47% and August 2014 within the range of 10.50% to 10.52%.
In addition, yields on the two year maturity eased to 11.12/17 while the three year yield tightened to 11.30/35. However, yields on the liquid five year maturity closed the day mostly unchanged at 11.86/87 subsequent to dipping to an intraday low of 11.84% in early hours of trading.
The Open Market Operations (OMO) of Central Bank was seen mopping up an amount of Rs 28.97 b for a period of seven days yesterday at a weighted average of 7.93% in order to draw out the build up excess liquidity in the system while a further Rs. 59.05 b was seen been deposited at CBSL’s Repo window of 7%. This in turn saw the averages on overnight call money and Repo rates dip marginally to 8.43% and 8.05% respectively as liquidity stood at a surplus of 88.02 b.
Rupee gains marginally
The USD/LKR rate continued to appreciate marginally to Rs 132.08/12 yesterday against its Friday’s close of Rs 132.15/20 on the back of selling interest by banks and reduced importer demand. The total USD/LKR traded volume for the previous day (20 September 2013) stood at US$ 72.46 million.
Some of the forward dollar rates that prevailed in the market were one month – 132.94; three months – 134.57; and six months -137.16.
