Upward momentum continues ahead of weekly bill auction

• GDP growth rate increases

By Wealth Trust Securities

The upward momentum in secondary market bond yields continued yesterday albeit at a slower pace and on the back of moderate volumes in comparison to its previous day’s trading. 

Selling interest on the two 2021’s (i.e. 15.10.21 and 15.12.21), 01.07.22 and 15.07.23 resulted in their yields increasing to intraday highs of 10.40%, 10.58%, 10.66% and 10.60% respectively against its previous day’s closing levels of  10.27/32, 10.25/35, 10.30/40 and  10.50/55.

Today’s bill auction will have on offer a total amount of Rs. 17.5 billion, consisting of Rs. 4 billion of the 91 day maturity, Rs. 1.5 billion of the 182 day maturity and Rs. 12 billion of the 364 day maturity. At last week’s auction, the weighted averages increased to 8.07% and 9.05% respectively on the 91 day and 364 day maturities while the 182 day maturity was not on offer for a third consecutive week.

Meanwhile, GDP growth rate for the second quarter 2018 was seen increasing to 3.7% against its revised 1st quarter of 3.5% and 3.0% for the 2nd quarter of 2017.

The total secondary market Treasury bond/bill transacted volumes for 17 September was Rs. 5.7 billion.

In the money market, the Open Market Operations (OMO) Department of the Central Bank injected an amount of Rs. 5 billion at a weighted average rate of 8.07% for seven days in addition to adding a further Rs. 15 billion to the system on an overnight basis at a weighted average rate of 7.97% as the net liquidity shortage stood at Rs. 26.08 billion yesterday. The overnight call money and repo rates averaged 8.01%.

Dollar continues 

to gain against LKR

The rupee on its spot contracts was seen depreciating further yesterday to close at Rs. 165.90/10 against its previous day’s closing levels of Rs. 165.00/30 on the back of continued importer demand.

The total USD/LKR traded volume for 17 September was $ 71.20 million.

Some of the forward USD/LKR rates that prevailed in the market were one month – 166.85/15; three months – 168.40/80; and six months – 171.00/40.