Bearish sentiment continues ahead of weekly bill auction

Wednesday, 12 February 2020 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

Activity in the secondary bond market continued to remain rather dull, ahead of today’s weekly Treasury bill auction. Limited trades were witnessed consisting of the 15.10.21, 15.07.23, two 2024s (i.e. 15.06.24 and 15.09.24) and 15.03.25 maturities within the range of 8.75%, 9.18%, 9.45% to 9.46% and 9.52% respectively.

In the secondary bill market, July 2020, August 2020, October 2020 and January 2021 maturities traded at levels of 7.92%, 8.00%, 8.30% and 8.45% to 8.48% respectively.

Today’s bill auction will have on offer a total amount of Rs.29.5 billion consisting of Rs. 7.5 billion on the 91 day, Rs.7 billion on the 182 day and Rs.15 billion on the 364 day maturities. At last week’s auction, weighted average yields decreased across the board by 14, 16 and 17 basis points to 7.37%, 7.99% and 8.42%. The total secondary market Treasury bond/bill transacted volume for 10 February was Rs.5.45 billion.

Meanwhile in money markets, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka refrained from conducting any auctions yesterday as the overnight liquidity surplus stood at Rs.17.79 billion. The overnight call money and Repo rates averaged 6.97% and 7.02% respectively.

Rupee loses marginally

In the Forex market, the USD/LKR rate on spot contracts closed the day marginally lower at Rs. 181.45/55 against its previous day’s closing level of Rs. 181.40/42 subsequent to trading within the range of Rs. 181.40 to Rs. 181.48.

The total USD/LKR traded volume for 10 February was $ 76.77 million.

Given are some forward USD/LKR rates that prevailed in the market: one month – 181.95/15; three months – 182.95/15; six months – 184.50/80.

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, money broking companies.)