Weekly Weighted Average rates plunge

• Bond yields decrease ahead of monetary policy announcement

By Wealth Trust Securities

The weekly Treasury bill auction conducted yesterday recorded an incredible outcome as the weighted average rates of the 182-day and 364-day bills were seen crashing by 84 basis points and 86 basis points respectively, to 3.87% and 4.13%, well below the Central Bank of Sri Lanka’s Standing Deposit Facility Rate of 4.5% - a phenomenon last seen in July. Furthermore, all bids received for the 91-day bill were rejected due to the total requirement of Rs. 40 billion been derived from the 182 and 364-day maturities. The bids to offer ratio increased to 2.07:1. 

In the secondary bond market, activity was seen throughout most part of the day along the yield curve within a thin range once again before two-way quotes dipped and widened at the latter part of the day, following the outcome of the weekly bill auction. The yields on the liquid maturities of 2024’s (i.e. 15.06.24 & 15.09.24) and 01.02.26 decreased to intraday lows of 6%, 6.02% and 6.5% respectively against its previous day’s closing levels of 6.02/05 each and 6.52/54. Furthermore, maturities of 2022’s (i.e. 15.11.22 & 15.12.22), 01.08.26, 2027’s (i.e. 15.08.27 & 15.10.27) and 01.07.28 were seen trading at levels of 5.53% to 5.55%, 6.5%, 6.85% to 6.87% and 7.07% to 7.085% respectively as well. In secondary bills, October 2021 maturities changed hands at levels of 4.93% to 4.95% pre auction while a September 2021 maturity changed hands at a level of 4.55%, following the auction outcome.

This was ahead of today’s Monitory policy announcement due at 7:30 a.m. The Central Bank of Sri Lanka kept policy rates unchanged its previous announcement on the 20 August.

The total secondary market Treasury bond/bill transacted volumes for 20 October was Rs. 10.18 billion.   

In the money market, the weighted averages on overnight call money and Repos were registered at 4.53% and 4.56% respectively, as the overnight surplus liquidity in the system stood at Rs. 210.69 billion yesterday.

Rupee appreciates marginally

In the Forex market, USD/LKR rate on spot contracts was seen appreciating marginally yesterday to close the day at Rs. 184.20/30 against its previous day’s closing level of Rs.184.45/60 on the back of selling interest by banks.

The total USD/LKR traded volume for 20 October was $ 139.95 million.    (References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)