Yield curve shifts down for a seventh consecutive week to hit a five month low
Monday, 28 October 2013 01:09
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By Wealth Trust Securities
Along with the prevailing positive momentum in the market, the outcome of the weekly Treasury bill auction and expectations for the medium term, secondary market bond yields dipped across the board to hit a five month low for the week ending 25th October 2013. The liquid two maturities of 01st January 2017 and 15th August 2018 dipped the most week to week by 22 basis points (bp) and 17 bp respectively to lows of 10.65% and 11.00%, recording levels last seen in May 2013 as activity remained very high. In addition, two year maturities were seen changing hands within a weekly low of 10.10% to a high of 10.40%, three years within 10.45% to 10.65%, while the 01st April 2018 maturity was seen changing hands within 10.95% to 11.10%. Meanwhile, in secondary bill markets demand throughout the week saw January 2014 bills change hands with the range of 8.15% to 8.45%, May within 9.00% to 9.30%, June within 9.20% to 9.40%, and August within 9.60% to 9.80% while the 364 day bill was traded within 9.88% to 9.95%.
Meanwhile, the overnight call money and repo rates remained steady throughout the week to average 7.86% and 7.12% respectively as surplus liquidity in the market remained steady as well to average Rs.20.93 billion.
The Open Market Operations (OMO) Department of Central Bank was seen mopping up liquidity during the week by way of seven day term repo auctions at weighted averages ranging from 7.45% to 7.47%.
A considerable portion of the daily surplus liquidity was seen been deposited at CBSL’s Repo window of 6.50% as the OMO department continued to refrain from conducting overnight auctions throughout the week.
Rupee gains to four month high
Inflows into debt and equity markets coupled with export conversions outweighing importer demand saw the USD/LKR rate gain to a four month high of Rs 130.45 during the week.
The daily average USD/LKR traded volume for the first four days of the week was at US $ 67.53 million.
Some of the forward dollar rates that prevailed in the market were 1 Month – 131.50; 3 Months- 133.15 and 6 Months- 135.60
