By Wealth Trust Securities

The weighted averages (W. Avg’s) at yesterday’s Treasury bond auctions increased considerably against market expectations ahead of a Rs. 86.4 billion bond maturity due on 15 July. 

The W. Avg on the 7.02-year maturity of 01.10.2022 was seen increasing the most by 57 basis points to 9.14% against its previously recorded average while the W.Avg on the 4.09 year maturity of 01.05.2020 was see increasing by 19 basis points to 8.39% against its previously recorded average as well. The 6.03-year maturity of 15.10.2021 recorded a W. Avg of 9.08% as the total accepted amount on all three maturities fell below the total offered amount of Rs. 40 billion by Rs. 8.80 billion. 

Following the outcome of the auctions, selling interest on the liquid maturities of 01.05.2020, 01.08.2021, 01.07.2022, 01.09.2023 and 15.03.2025 saw its yields increase to a twelve day trading high of 8.60%, 9.20%, 9.25%, 9.35% and 9.40% respectively against its days opening lows of 8.30%, 8.88%, 9.00%, 9.10% and 9.20%. However, buying interest at these levels curtailed any further upward movement.

Meanwhile, in money markets yesterday, overnight call money and repo rates averaged at 6.14% and 5.93% respectively as surplus liquidity remained high at Rs. 62.72 billion.

The USD/LKR rate on spot contracts stood at Rs. 133.60 for a seventh consecutive day. The total USD/LKR traded volume for the previous day (08-07-15) stood at $ 35.10 million. 

Some of the forward dollar rates that prevailed in the market were 1 Month - 134.15/20, 3 Months - 135.25/35 and 6 Months -136.85/95.

Rupee ends steady for 5th session

Reuters: The rupee ended steady for a fifth straight session on Thursday as demand for more dollars by importers was offset by selling of the greenback at 133.60 by banks and exporters, dealers said.

One of the state-owned banks, through which the Central Bank usually directs the market, has kept the selling rate of the dollar at 133.60 since 2 July, dealers said.

“There are some exporter dollar sales here and there. But the excess importer dollar demand has been met by the bank’s dollar sales. Otherwise, the rupee might depreciate,” a currency dealer said.

The currency has appreciated 0.45% since it hit a record low of 134.20 against the dollar on 18 June.

The Central Bank may not be able to sustain the rupee’s appreciation trend as import demand could pick up due to lower interest rates, dealers and analysts say.

The pressure on the currency could also build if exporters stop selling dollars until after the parliamentary elections, dealers said.

President Maithripala Sirisena dissolved parliament on 26 June and scheduled the election for 17 August, in an effort to consolidate power and push through political reforms, ending a months-long deadlock.