Weekly Treasury bill auction to set momentum once again

By Wealth Trust Securities

The market generated positive information on interest rates will see today’s weekly Treasury bill auction grabbing much attention following mix signals at last week’s auction. At today’s auction a total amount of Rs. 15 b is on offer with Rs. 1 b on the 91 day, Rs. 3 b on the 182 day and Rs. 11 b on the 364 day bills respectively.

At last week’s auction, the 91 day weighted average (WAvg) remained unchanged at 8.75% while the Wavg on the 182 day dipped by 01 basis point (bp) to 9.90%. However the WAvg on the 364 day bill increased by two bp for the first time in eight weeks to 10.86%.

Leading to the auction, Secondary market bond yields dipped marginally in thin trading yesterday with active two way quoted mainly seen on the liquid two five year maturities (i.e. 1 April 2018 and 15 August 2018) as it hit intraday lows of 11.10% and 11.16% respectively.

Furthermore the 364 day bill was seen been quoted at levels of 10.82%-10.88% in secondary markets as well.

Given are the closing, secondary market yields for the most frequently traded maturities.

The Central Bank continued to refrain from conducting any Open Market Operation (OMO) auctions yesterday as surplus liquidity in money markets dipped to Rs. 2.72 billion. An amount of Rs. 6.57 b was deposited at the Central Bank’s repo window rate of 7.00% while Rs. 3.85 b was accessed from its reverse repo window rate of 9.00%. Overnight call money and repo rates remained steady to average 9.00% and 8.39% respectively.

Rupee depreciates marginally

The rupee lost ground yesterday to an intraday low of Rs. 130.53 on the back of importer demand. However selling interest at these levels on spot contracts saw the greenback hold to close the day within the range of Rs. 130.45-Rs.130.50. The total USD/LKR volume for the previous day stood at US$ 54.30 million.  Some of the forward dollar rates that prevailed in the market were one month –127.32; three months – 128.98; and six months – 131.58.