Bond yields increase further ahead of monetary policy announcement

By Wealth Trust Securities 

The secondary market bond yields were seen increasing further yesterday ahead of the much anticipated monitory policy announcement due today at 7.30 a.m. The Central Bank kept its policy rates unchanged at its last announcement on 3 August. 

The liquid maturities of 15.10.21 and 15.07.23 saw its yields increase to intraday highs of 11.10% and 11.28%, respectively, against its previous day’s closing levels of 10.90/95 and 11.05/12. Furthermore, the two 2021’s (i.e. 01.03.21 and 01.08.21), 15.10.25 and 15.03.28 maturities were seen changing hands at levels of 10.50% to 11.05%, 11.55% and 11.40%, respectively, as well with the overall traded volume moderating. 

The total secondary market Treasury bond/bill transacted volumes for 28 September was Rs. 10.46 billion. 

In money markets, the Open Market Operations (OMO) department of the Central Bank of Sri Lanka injected an amount of Rs.21 billion on an overnight basis and Rs.10 billion for 7 days at weighted averages of 8.19% and 8.29% respectively as the net liquidity shortfall remained at a high of Rs.46.24 billion yesterday. The overnight call money and repo rates averaged 8.42% and 8.48% respectively.

Rupee appreciates marginally

The USD/LKR rate on spot contracts was seen appreciating marginally to close the day at Rs. 169.00/20 against its previous day’s closing of Rs. 169.20/40 subsequent to restrictive import measures taken.

The total USD/LKR traded volume for 28 September was $ 45.45 million. 

Some forward USD/LKR rates that prevailed in the market were 1 month – 170.20/50, 3 months – 172.00/40 and 6 months – 174.80/20.

Closing secondary market yields of the most frequently traded T – bills and bonds