Yields remain steady ahead of monetary policy announcement

Tuesday, 20 May 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Activity in secondary bond markets dried up yesterday ahead of today’s monetary policy announcement for the month of May, as yields remained broadly steady with active two-way quotes mainly seen on the liquid two 2018 maturities (i.e. 01.04.2018 & 15.08.18) and the 01.07.2019 maturity at levels of 8.46/50, 8.54/59 and 8.95/98 respectively. Furthermore, a limited amount of activity was witnessed on the shorter leg of the yield curve, with 2015, 2016 and 2017 maturities changing hands with the range of 7.20% to 7.23%, 7.35% to 7.60% and 8.00% to 8.07% respectively. Meanwhile in Treasury bills markets, durations from two months to seven months continued to change hands within the range of 6.55% to 6.75%. Meanwhile in money markets, the Open Market Operations (OMO) department of the Central Bank was seen mopping up an amount of Rs. 10.61 billion on a four day basis at a WAvg of 6.61% as surplus liquidity in money markets stood at Rs. 15.88 billion yesterday. The overnight call money and repo rates remained steady to average 6.95% and 6.51% respectively. Rupee dips marginally In Forex markets, the USD/LKR rate lost ground marginally yesterday to close the day at Rs. 130.39/130.42 against its previous day’s closing levels of Rs. 130.36/37 on the back of importer led demand. The total USD/LKR traded volume for the previous day (16 May) stood at $ 124.30 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 130.88, 3-Months: Rs. 131.88 and 6-Months: Rs. 133.41.

Rupee ends steady

Reuters: The rupee ended steady on Monday, a day ahead of a monetary policy decision by the Central Bank, as late importer demand for the dollar currency offset inflows from remittances. Dealers expect the Sri Lankan currency to rise, fed by steady inflows in the absence of strong demand for imports and credit. The rupee ended at 130.35/40 per dollar, little changed from Friday’s close of 130.37/40. “There was importer demand for dollars later in the day and some trade was done at Rs. 130.38,” a currency dealer said. The Central Bank will release its monetary policy rates at 0200 GMT on Tuesday. The market broadly expects rates to be left steady at their current multi-year lows. The Central Bank has been “giving effect to the present trend in a gradual manner,” Central Bank Governor Ajith Nivard Cabraal told Reuters on 9 May. Steady inflows from remittances and exporter conversions, amid lack of importer dollar demand, earlier led to the rupee’s appreciation, dealers said. They expect the rupee to face upward pressure until credit growth and imports reverse their trends. The currency has hovered between 130.55 and 130.70 from 3 March through 8 May, Thomson Reuters data showed, with the Central Bank intervening to smoothen any sharp volatility.