Activity dries up ahead of planned Treasury bond auction

Monday, 25 March 2013 00:34 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The upward trend in secondary market yields witnessed during the previous week continued with the weighted averages at the weekly Treasury bill auction increasing for the third consecutive week.

In the meantime the Central Bank reduced the total offered amount at next week’s auction to be held on 25 March to Rs. 10 billion in comparison to the 15 billion of this week. The amounts on offer are Rs. 1 b of the 91-day bill, Rs. 2 b of the 182-day bill and a further Rs. 7 b of the 364-day bill.

The two liquid five-year bond maturities (i.e. 15 August 2018 and 1 April 2018) increased from lows of 11.40% to highs of 11.50% and continued to close the week at levels of 11.35%-11.40%, due to increased buying interest.

However, activity remained rather dull during the latter part of the week as the Central Bank announced three Treasury bonds auctions, to be held on 27 March, consisting of maturities of 15 July 2018, 1 September 2023 and 1 February 2026. The amounts on offer are Rs. 3 billion, Rs. 6 billion and Rs. 6 billion each. The weighted average at the previous 2018 bond auction stood at 10.97%.

Meanwhile concerns over money market liquidity eased off marginally as surplus liquidity increased towards the latter part of the week to close the week at Rs. 13.45 b from its two month low of Rs. 8.18 billion as of 21 March. The Open Market Operations (OMO) department of Central Bank was seen mopping up liquidity on a daily basis at a weighted average of 8.35% as overnight call money and repo rates remained steady to average 9.45% and 8.57% for the week.

Rupee dips to Rs 127

The rupee depreciated during the week against its last week’s closing levels of Rs. 126.10 to a two week high of Rs. 127 on Friday. The total USD/LKR traded volume for the first four days of this week stood at US$ 64.82 million. Given are some forward dollar rates that prevailed in the market: one month – 127.99; three months – 129.99; and six months – 132.94.