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Tuesday, 5 February 2019 01:01 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The secondary bond market turned bullish during the week ending 1 February as yields were seen deceasing on the back of continued foreign buying and renewed local buying interest, reversing an upward trend witnessed during the previous week.
Foreign buying in to Rupee bonds continued for a second consecutive week, recording an inflow of Rs. 0.92 billion for the week ending 30 January 2019 and a cumulative inflow of Rs .5.66 billion for the two weeks ending 30 January 2019. The bullish sentiment was further supported by the primary auction results, where the weighted average on the 364 day bill decreased for a sixth consecutive week to 10.69%. Similarly, significant demand for the two bond auctions saw it record impressive weighted averages of 10.85% and 11.30% respectively for the maturities of 01.08.2021 and 15.01.2027.
Considerable buying interest across the yield curve saw yields dip with the liquid maturities of 01.08.21, 15.12.23, 15.03.25, two 2026’s (i.e. 01.06.26 and 01.08.26), 15.06.27 and 01.09.28 hitting weekly lows 10.72%, 10.95%, 11.15%, 11.22%, 11.13%, 11.24% and 11.35% respectively against its previous weeks closing levels of 10.85/95, 11.32/38, 11.48/55, 11.50/60, 11.60/63, 11.60/70 and 11.62/70 reflecting a parallel shift downward of the overall curve. Meanwhile in the secondary bill market, January 2019 maturities changed hands at 10.60%. The overnight call money and repo rates averaged at 8.98% and 9.00% respectively for the week as the average overnight net liquidity shortfall in the system reduced to Rs. 111.76 billion for the week against its previous weeks of Rs. 133.12 billion. The OMO (Open Market Operation) Department of Central Bank continued to inject liquidity during the week on an overnight basis at weighted average of 9.00%. The total outstanding market liquidity shortfall improved further to Rs. 106.12 billion, recording a cumulative improvement of Rs. 70.3 billion over the past six weeks.
Rupee appreciates considerably
The rupee on spot contracts closed the week considerably higher at Rs. 176.80/10 in comparison to its previous weeks closing levels of Rs. 181.60/65 on back of continued foreign buying in Rupee bonds along with export conversions.
The daily USD/LKR average traded volume for the first four days of the week stood at $ 93.15 million.
Some of the forward dollar rates that prevailed in the market were 1 month – 177.70/10; 3 months – 179.60/00 and 6 months – 182.50/90.
