364-day bill average decreases at a slower pace

• Bids to offer ration dips to a 16-week low
• Bond market activity picks up as yields decrease  

By Wealth Trust Securities

The degree of decline on the 364-day bill weighted average was seen slowing considerably at yesterday’s weekly Treasury bill auction, recording its fifth consecutive week of declines. It registered a mere drop of 02 basis points to 8.88% while the 182-day bill dipped by 08 basis points to 8.63%. 

All bids received for the 91-day bill was rejected for a second consecutive week. The total offered amount of Rs. 20 billion was fully met at the auction as the bid to offer ratio dipped to a 16-week low of 2.46:1.

Activity in the secondary bond market picked up yesterday as yields were seen decreasing marginally yesterday across the curve on the back of renewed buying interest. The yields of the 2021s (i.e. 01.03.21, 01.05.21, 01.08.21, 15.10.21 and 15.12.21), 01.10.22, the 2023s (i.e. 15.05.23 and 15.07.23), 15.03.24, 01.08.26, 15.01.27 and 01.05.29 were seen decreasing to intraday lows of 9.15%, 9.30%, 9.30%, 9.35%, 9.35%, 9.57%, 9.80%, 9.82%, 9.95%, 10.23%, 10.30% and 10.46% respectively against its previous day’s closing levels of 9.25/35, 9.30/40, 9.30/40, 9.45/50, 9.42/48, 9.75/85, 9.85/90, 9.90/95, 9.97/02, 10.25/30, 10.37/43 and 10.55/58. 

The total secondary market Treasury bond/bill transacted volumes for 28 May was Rs. 5 billion. 

In the money market, overnight call money and repo rates averaged 8.44% and 8.60% respectively as the OMO department of Sri Lanka was seen draining out an amount of Rs. 5.25 billion on an overnight basis by way of a repo auction at a weighted average of 8.56%. The net liquidity surplus stood at Rs. 22.11 billion yesterday.  

 Rupee holds steady  

 In Forex markets, the spot rate was seen closing broadly steady yesterday at Rs. 176.30/40 against its previous day’s closing levels of Rs. 176.25/35 on an equilibrium market.

The total USD/LKR traded volume for 28 May was $ 113.23 million.

Given are some forward USD/LKR rates that prevailed in the market: one month – 176.90/05; three months – 178.45/65; six months – 180.80/10.