Activity picks up in secondary bond markets as yields decline marginally

Tuesday, 6 May 2014 00:01 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The secondary markets for Treasury bills and bonds started the week with the announcement of the external sector performance for the month of February, which saw the trade deficit narrowing further as a result of an increase in earnings from exports and a further decline in expenditure on imports. Furthermore an increase in worker remittances and tourism income coupled with inflows to the financial account saw the Balance of Payment (BOP) record a healthy growth to $ 805.7 million by end February 2014 in comparison to the corresponding number of $ 107.3 million by end February 2013. Activity in secondary bond markets continued to surround the belly end of the yield curve as buying interest saw its yields dip during the course of yesterday with the liquid two 2018 maturities (i.e. 01.04.2018 and 15.08.2018) and the 1 July 2019 maturity hit daily lows of 8.70%, 8.80% and 9.04% respectively against its opening highs of 8.72%, 8.83% and 9.08%. In addition, a limited amount of activity was witnessed on the shorter end of the curve as well, with 2015 maturities changing hands at levels of 7.30% and 2016 within the range of 7.70% to 7.75%. Meanwhile in secondary bill markets, durations centering seven to nine months were seen quoted within the range of 6.80% to 6.90%. Meanwhile in money markets, overnight call money and repo rates averaged 6.93% and 6.50% respectively as surplus liquidity in money market stood at Rs. 20.72 billion yesterday. The Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs. 14.36 billion on a four-day basis at a WAvg of 6.60% while a further amount of Rs. 6.36 billion was deposited at its Standing Deposit Rate (SDR) of 6.50%. Rupee appreciates marginally Meanwhile in Forex markets, the rupee gained marginally yesterday to close the day at levels of Rs. 130.60/61 on the back of export conversions outweighing importer demand and the recorded increase in the BOP surplus. The total USD/LKR traded volume for the previous day (2 May 2014) stood at $ 61.50 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.14, 3-Months: Rs. 132.08, 6-Months: Rs. 133.66.