Upward trend in bond yields continue, term auction to drain out liquidity

By Wealth 

Trust Securities

The upward trend in secondary bond market yields continued yesterday as well, with yields of the 15.12.21, 15.07.23 and 01.09.28 maturities increasing further to intraday highs of 9.75%, 10.02% and 10.36%, respectively, against its previous day’s closing levels of 9.68/78, 9.98/03 and 10.30/40. Furthermore, the two 2019’s (i.e. 01.07.19 and 15.09.19), 01.05.20 and 15.03.23 maturities were also seen changing hands at levels of 9.05% to 9.10%, 9.35%, and 9.90% to 9.98%. Meanwhile, in the secondary bill market, January, February, March, May and June 2019 maturities traded at levels of 8.60%, 8.67%, 8.72% and 8.90%, respectively.

The total secondary market Treasury bond/bill transacted volumes for 21 August was Rs. 5.33 billion. In money markets, overnight call money and repo rates averaged at 7.76% and 7.75%, respectively, as the net surplus liquidity in the system stood at Rs. 25.30 billion. The OMO Department once again conducted a term repo auction and drained out an amount of Rs. 11.75 billion at a weighted average rate of 7.68% for seven days.

Rupee slides further 

The rupee on spot contracts depreciated further to close the day at Rs. 160.75/85 against its previous day’s closing level of Rs. 160.65/70 on the back of importer demand and a strengthening dollar.

The total USD/LKR traded volume for 21 August was $ 66.75 million.

Some of forward USD/LKR rates that prevailed in the market were 1 Month - 161.60/70; 3 Months - 163.20/30, and 6 Months - 165.60/75.