Activity dries up as bond markets reflect mixed fortunes during the week
Monday, 15 September 2014 00:07
By Wealth Trust Securities
The secondary bond market reflected mixed fortunes during the week as yields were seen seesawing by increasing during the early part of the week, dipping marginally during mid-week and increasing once again to its weeks opening levels as activity moderated considerably.
The overall yield curve reflected a marginal parallel shift upwards week on week for the week ending 12 September as the limited amount of activity was mainly seen on the maturities of the two 2018s (1 April 2018 and 15 August 2018), 1 July 2019, 15 September 2019 and 1 July 2022 within weekly lows of 7.13%, 7.20%, 7.40%, 7.45% and 8.08% respectively against highs of 7.30%, 7.32%, 7.55%, 7.55% and 8.15%. Furthermore, activity on the two 2029 maturities (1 January 2029 and 1 May 2029) saw it change hands within a weekly low of 9.10% to a high of 9.15% as well.
The dip in yields mid-week was prompted by the outcome of the weekly Treasury bill auction at where weighted averages dipped by one basis point across the board to levels of 6.18%, 6.27% and 6.29% on the 91 day, 182 day and 364 day maturities respectively against market expectations of weighted averages to remain unchanged. In secondary bill markets, October 2014 bills were seen changing hands within the range of 6.28% to 6.33% while July 2015 was offered at levels 6.35% during the latter part of the week.
In money markets, overnight call money and repo rates remained steady to average 6.70% and 6.52% during the week as average surplus liquidity dipped to Rs. 40.29 billion in comparison to its previous weekâ€™s average of Rs. 51.06 billion.
Rupee dips to over seven week low
The rupee on spot contracts was seen dipping during the week to a seven week low of Rs. 130.28 on the back of importer demand while activity on spot next contracts increased as it was seen dipping as well to a low of Rs. 130.35. The daily average USD/LKR traded volume for the first three trading days for the week ending 12 September was at $ 62.98 million.
Some of the closing forward dollar rates that prevailed in the market were: one month â€“ 130.81; three months â€“ 131.50; and six months â€“ 132.55.