Weekly averages drop to levels last seen during the first quarter of 2012

By Wealth Trust Securities

Weighted averages on all three maturities dipped at yesterday’s weekly Treasury bill auction following Central Bank’s cut on policy rates by 50 basis points Last Friday. All three maturities broke their respective big figures with the 364 day bill reflecting the biggest drop of 45 basis points to 10.84%, a level last seen in March 2012 and a degree of such a drop was only witnessed in December 2012.

The 91 day dipped by 43 basis points to 8.75%, a level last seen in February 2012. The 182 day dipped by 29 basis points to 9.91%, a level last seen in March 2012.  The market favorite 364 day maturity kept its dominance over the auction as it represented 79.47% of the total accepted amount, carrying the total accepted amount to Rs 19.1 b, Rs 4.1 b above the initial total offered amount. Given below are the details of the auction.

Activity in secondary bond markets continued to remain high yesterday as yields edged up marginally subsequent to the announcement of the auction results. The two liquid five year maturities (i.e. 01 April 2018 and 15 Auguest 2018) hit an intraday high of 11.00% and 11.03% respectively against its day’s opening lows of 10.95% and 10.97%. Furthermore the eight year maturity was seen changing hands within the range of 11.50% to 11.55% as well. Demand for the 364 day bill subsequent to the auction saw it been quoted within the range of 11.80% to 11.85% in secondary markets.  Meanwhile in money markets, overnight call money and repo rates remained steady to average 9.00% and 8.30% respectively despite liquidity reversing to a negative once again of Rs 4.9 b. The Open Market Operations (OMO) department of Central Bank infused an amount of Rs 3.0 b into the system on an overnight basis at a weighted average of 8.28% by way of a reverse repo auction with a further Rs 2.4 b been accessed from its discount widow of 9.00%.

Rupee appreciates to Rs 126

 The USD/LKR rate gained to Rs 126 yesterday on the back selling interest on forward dollar contracts driven by a dip in forward premiums. The total USD/LKR volume for the previous day stood at US $ 60.65

million.