Upward trend persists in secondary markets as primary auction rates remain steady

Thursday, 13 November 2014 00:00 - - {{hitsCtrl.values.hits}}

Liquidity dips to a four-month low

By Wealth Trust Securities Secondary bond market yields increased for a second consecutive day as weighted averages (WAvg) at yesterday’s weekly bill auction remained unchanged. The WAvg on the 182 day bill remained at 5.84% for a second consecutive week while the WAvg on the 364 day bill remained at 6.00% for a fifth consecutive week. An additional amount of Rs 13.72 billion was accepted at the auction against its initial total offered amount of Rs. 10 billion with the 182 day bill representing 57% of this volume, signalling a shift in market appetite to the shorter duration. In secondary bond markets, selling interest centering the two 2018 maturities (i.e. 01.04.2018 and 15.08.2018) saw it change hands within the range of 6.88% to 6.90% and 6.95% to 6.98% respectively, the 01.07.2019 within 7.03% to 7.08%, the 01.05.2021 within 7.38% to 7.42% and the 01.07.2022 within 7.61% to 7.65% and the 01.01.2024 within 7.82% to 7.84%. In secondary bill markets, the 182 day and 364 day bills were quoted at 5.75/85 and 5.95/03 post auction. In money markets, surplus liquidity was seen dipping to a four-month low of Rs 3.06 billion yesterday which in turn saw the weighted averages on overnight call money and repo increase marginally to levels of 6.00% and 5.34% respectively. Rupee dips marginally The dollar/rupee (USD/LKR) rate on spot next contracts (five day forward) depreciated marginally yesterday to close the day within the range of Rs. 131.00-Rs. 131.15 while spot next-next contracts (six day forward) were seen closing within the range of Rs. 131.10 to 131.15 on the back of continued importer demand. The total USD/LKR traded volume for the 11 November 2014 was at US $ 38.81 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 131.57; 3 Months - 132.65 and 6 Months - 133.80.

Rupee forwards ease on importer dollar demand; seen falling

Reuters: Rupee forwards eased slightly on Wednesday due to importer dollar demand, but moral suasion by the central bank prevented a fall in the spot currency, dealers said. Traders said the local currency was under pressure as imports continue to rise in a stable exchange rate and low interest rates amid a globally weak yen. The spot currency ended at 130.90/131.10 per dollar compared with Tuesday’s close of 130.90/131.00. Dealers said banks were reluctant to trade the spot below 130.90 due to moral suasion by the Central Bank. Three-day forwards, or spot next, which was also capped at 131.00, ended at 131.00/10 per dollar compared with Tuesday’s close of 131.00/05. Dealers said the Central Bank’s capping of the spot next at 131.00 forced banks to trade in four-day forwards, which ended at 131.10/16 per dollar compared with Tuesday’s close of 131.05/12. “Import demand was there. State (banks) are also buying dollars,” a dealer said on condition of anonymity. “Imports have picked up. A lot of vehicle imports are also there due to the weak yen and the seasonal import demand has also been picking up.” The Central Bank was not available for comments. The market expects the local currency to remain weak due to rising seasonal imports at least through November and only start to inch up in December on remittances, dealers said. Overseas investors sold a net Rs. 39.12 billion ($ 299 million) worth of government securities in the seven weeks through 5 November, data from the Central Bank showed.