Bond yields continue to increase ahead of weekly bills auction

• Offer volume increases to 34-week high
• Rupee dips for fourth consecutive day 

By Wealth Trust Securities

The secondary bond market yields were seen increasing further yesterday for a fourth consecutive day on the back of sustained selling interest. 

The market favourite maturities of 2024s (i.e.15.03.24, 15.06.24 and 15.09.24) and 15.10.27 saw its yields increase to intraday highs of 9.70% each, 9.75% and 10.03% respectively against its previous day’s closing levels of 9.55/65, 9.57/65 and 9.94/00. In addition, the maturities of 15.03.23, two 2027s (i.e. 15.01.27 and 15.06.27) and 15.03.28 changed hands at levels of 9.30%, 10.10% to 10.15% and 10.15% to 10.20% respectively, reflecting an upward shift on the overall yield curve.  

At today’s weekly Treasury bill auction, the total offered volume will increase to a 34-week high of Rs.28 billion, consisting of Rs. 1 billion on the 91 day, Rs. 9 billion on the 182 day and a further Rs. 18 billion on the 364 day maturities respectively. At last week’s auction, the weighted average on the 364 day bill decreased by 29 basis points to 8.22% while weighted averages on the 91 day and 182 day maturities decreased by nine basis points each to 7.47% and 7.58% respectively.

The total secondary market Treasury bond transacted volume for 25 November was Rs. 8.35 billion. In money markets, the Open Market Operations (OMO) Department of the Central Bank refrained from conducting any auctions for a third consecutive day as the overnight net liquidity surplus in the system stood at Rs. 35.39 billion yesterday. The overnight call money and repo rates averaged 7.50% and 7.53% respectively.

LKR continues to lose  

In the Forex market, the USD/LKR rate on spot contracts was seen depreciating further for a fourth consecutive day to close the day at Rs. 181.65/95 against its previous day’s closing levels of Rs. 180.85/00 on the back of buying interest by banks.

The total USD/LKR traded volume for 25 November was $ 36.76 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 182.05/35; three months - 183.10/50 and six months - 184.70/20.