Downward trend in yields continue ahead of weekly Treasury bill auction

By Wealth Trust Securities

Continued buying interest in the secondary bond market saw yields on the liquid maturities of the 15.09.19, 01.05.20, the three 2021’s (i.e. 01.03.21, 01.05.21 and 15.12.21), 01.09.23, 01.08.26, 15.06.27 and 15.05.30 decreasing further yesterday to intraday lows of 9.60%, 9.75%, 9.90%, 9.95% each, 10.10%, 10.08%, 10.22% and 10.50% respectively as against its previous day’s closing levels of 9.60/70, 9.75/80, 9.90/95, 9.92/98, 9.95/00, 10.10/17, 10.15/18, 10.15/25 and 10.52/58.

This was ahead of today’s Treasury bill auction where an total amount of Rs. 21 billion will be on offer, consisting of Rs. 5 billion of the 91 day maturity, Rs. 5.5 billion of the 182 day maturity and a further amount of Rs. 10.5 billion of the 364 day maturity. 

At last week’s auction, weighted averages of the 182 day and 364 maturities decreased by two and three basis points respectively to 9.10% and 9.48% while the weighted average of the 91 day maturity decreased by one basis point to 8.75%.

The Central Bank of Sri Lanka was seen keeping its policy rates unchanged at 7.25% and 8.75% at its seventh monitory policy announcement yesterday.

The total secondary market Treasury bond/bill transacted volumes for 6 November 2017 was Rs. 8.39 billion.

In money markets, the OMO (Open Market Operations) Department of the Central Bank of Sri Lanka was seen draining out an amount of Rs. 11.29 billion on an overnight basis by way of a Repo auction at a weighted average of 7.25% as the net liquidity surplus in the system stood at Rs. 13.02 billion yesterday. This intern saw the overnight call money and repo rates averaging at 8.15% and 7.63% respectively.

Rupee appreciates further  

In the Forex market, the USD/LKR rates on spot contracts were seen appreciating further yesterday to close the day at Rs. 153.35/40 against its previous day’s closing levels of Rs. 153.55/60 on the back of continued selling interest by banks and inward remittances.

 The total USD/LKR traded volume for 6 November was $ 52.47 million.

 Some of the forward USD/LKR rates that prevailed in the market were one month - 154.20/30; three months - 155.95/15 and six months - 158.55/65.