Yield curve moves up for the first time in seven weeks

Tuesday, 21 January 2014 00:01 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The downward trend in secondary market bond yields that prevailed over the past six weeks came to a halt as yields edged up marginally. However, activity remained sluggish due to a short trading week as most market participants were seen on the sidelines despite the weight averages (WAvgs) at the weekly Treasury bill auction dipping for a 17th consecutive week, to record 6.86%, 7.02% and 7.15% respectively on the 91-day, 182-day and 364-day maturities. Majority of the secondary market activity, yet again, was centered on the more liquid 2018 maturities (i.e. 1 April 2018 and 15 August 2018) as it was seen hitting an intraweek high of 8.86% and 8.92% respectively against opening lows of 8.67% and 8.77%. In addition the 01.07.2019 maturity was seen quoted at 8.95/05 in comparison to last week’s closing levels of 8.75/80. More interestingly, the secondary bill market two way quotes consisting of all maturities was seen in the range of 6.75% to 7.10%. In the money markets, Overnight call money and repo rates increased marginally during the latter part of the week to average 7.41% and 6.86% respectively as average surplus liquidity in the system decreased to Rs. 23.99 billion against its last week’s average of Rs. 56.28 billion. The Open Market Operations (OMO) department of Central Bank was seen mopping up liquidity on a term basis during the week as it carried out four term repo auctions, totalling Rs. 28.5 billion for durations of 4-days, 35-days, 63-days and 77-days at WAvgs of 6.65%, 6.80%, 6.77% and 6.81% respectively. Interestingly, Central Banks Standing Lending Facility Rate (SLFR) of 8.00% was seen been accessed during the week as liquidity dropped to a low of Rs. 12.9 billion on 16 January 2014. Rupee drops marginally during the week The rupee lost ground marginally during the week to close the week at Rs. 130.73/75 in comparison to its previous weeks closing levels of Rs. 130.68/72. The daily average USD/LKR traded volume for the first two days of the week was at $ 43.58 million. Given below are some forward dollar rates that prevailed in the market: one month – Rs. 131.13; three months – Rs. 131.72; six months – Rs. 132.74.