Upward momentum continues ahead of weekly Treasury bill auction

• Inflation continues increasing trend

By Wealth Trust Securities

The upward momentum in secondary bond market yields continued as the four-year maturities of 01.05.21 and 01.08.21 were seen changing hands within the range of 12.70% to 12.80% on the back of persistent foreign selling interest. 

In addition, the shorter maturity of 15.11.18 was seen changing hands within the range of 11.80% to 11.83% as well.

 At today’s weekly bill auction, a total amount of Rs. 28 billion will be on offer consisting of Rs. 5 billion on the 91 day, Rs. 13 billion on the 182 day and Rs. 10 billion on the 364 day maturities. At last week’s auction, the weighted averages increased on the 91 day and 182 day maturities to 9.03% and 10.07% respectively while the weighted average on the 364 day remained steady at 10.37%.

Meanwhile, inflation for January was seen increasing further to 5.5% on its point to point while its annualised average increased to 4.3% as well against its previous month’s figures of 4.5% and 4.0% respectively.

Meanwhile in money markets, the overnight call money and repo rates averaged 8.38% and 8.40% respectively as the Open Market Operations (OMO) department of the Central Bank was seen mopping up an amount of Rs. 46.40 billion on an overnight basis at a weighted average of 7.53%. The net surplus liquidity stood at Rs. 46.41 billion yesterday.

Deprecating trend continues 

In Forex markets, the USD/LKR rate on active two weeks forward contracts depreciated further yesterday to close the day at Rs. 151.05/15 against its previous day’s closing levels of Rs. 151.00/10 while the reference rate on spot contacts was increased to Rs. 150.50 from its previous rate of Rs. 150.25.

The total USD/LKR traded volume for 30 January 2016 was $ 106.20 million.

Some of the forward USD/LKR rates that prevailed in the market were three months - 153.00/25 and six months - 155.65/00.