Secondary market bond yields dips ahead of monetary policy announcement

By Wealth Trust Securities

The secondary bond market remained active yesterday as yields continued to dip for a third consecutive day ahead of the seventh monetary policy announcement for 2017 due today at 7.30 a.m. 

The Central Bank of Sri Lanka last changed its policy rates with an increase of 25 basis points at its meeting held in March 2017.

 Buying interest mainly on the belly end of the yield curve saw yields on the liquid maturities of 01.05.20, 01.05.21 and 01.08.26 dip to intraday lows of 9.80%, 9.95% and 10.14% respectively against its previous day’s closing levels of 9.82/90, 9.98/03 and 10.20/22. 

In addition, the 15.09.19, the two 2021s (i.e. 01.03.21 & 15.12.21) and the 01.10.22 maturities were seen changing hands at levels of 9.65%, 9.90% to 10.00% and 10.12% respectively as well. In the secondary bill market, July and September 2018 maturities were traded at levels of 9.10% and 9.27% respectively.

 The total secondary market Treasury bond/bill transacted volumes for 2  November 2017 was Rs. 5.06 billion.

In money markets, overnight call money and repo rates remained mostly unchanged to average 8.15% and 7.63% respectively as the Open Market Operations (OMO) department of the Central Bank drained out an amount of Rs. 12.00 billion yesterday at a weighted average of 7.25 by way of an overnight repo auction. The net surplus liquidity in the system stood at Rs. 15.33 billion.

Rupee appreciates marginally  

 In the Forex market, the USD/LKR rates on spot contracts were seen appreciating marginally to close the day at Rs.153.55/60 against its previous day’s closing levels of Rs. 153.60/68 on the back of selling interest by banks and inward remittances with activity moderating.

The total USD/LKR traded volume for 2  November 2017 was $ 34.64 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 Month - 154.40/50; 3 Months - 156.20/30 and 6 Months - 158.70/85.