Bond yields continue to decrease ahead of weekly bill auction

By Wealth Trust Securities

The secondary bond market yields were seen decreasing further yesterday ahead of the weekly Treasury bill auction due today. 

A total amount of Rs. 7.5 billion will be on offer, consisting Rs. 3.5 billion on the 91 day maturity and Rs. 4 billion on the 364 day maturity. At last week’s auction, the weighted averages increased across the board to 9.48%, 9.75% and 10.44% respectively on the 91 day, 182 day and 364 day maturities.

In secondary bond market, continued buying interest saw yields on the liquid maturities of 01.03.21, 15.10.21, 15.12.21 and 15.07.23 dipping to intraday lows of 10.60%, 10.75%, 10.80% and 11.22% respectively against its previous day’s closing levels of 10.65/75, 10.75/85, 10.82/86 and11.28/32. On the very short end of the curve, the 15.09.19 maturity was seen changing hands at 10.10%.

The total secondary market Treasury bond/bill transacted volume for 19 October was Rs.7.05 billion.  

In the money market, call money and repo averaged 8.45% each as the OMO department of Central Bank was seen injecting liquidity by way of an overnight and a seven day term repo auction for amounts of Rs. 11 billion and Rs. 13 billion respectively at weighted averages of 8.40 and 8.44%.

The net liquidity shortfall increased to Rs.26.98 billion yesterday. The OMO department infused a further amount of Rs. 17.10 billion and in total Rs. 2.1 billion respectively by way of a 14-day term repo auction and two outright auctions for 206 and 213 days at a weighted average rate of 8.46%, 9.63% and 9.68%, valued today.  

Rupee continues slide to a new low   

 A globally strengthening dollar coupled with importer dollar demand saw the USD/LKR rate on spot contracts dipping further yesterday to close the day at Rs. 172.30/60 against its previous day’s closing levels of Rs. 171.65/80.

The total USD/LKR traded volume for 19 October was $ 20.60 million.

Given are some forward USD/LKR rates that prevailed in the market: one month – 173.30/60; three months – 175.30/70; six months – 178.30/80.