Bond prices dip marginally as policy rates held unchanged for fourth consecutive month

By Wealth Trust Securities

The secondary market for Treasury bills and bonds started the week with the announcement of the monthly monitory policy decision yesterday, which saw Central Bank hold its policy rates unchanged at 7.50% and 9.50% for a fourth consecutive month.

This in turn saw secondary market bond yields increase marginally in very dull trading mainly on the liquid four year and five year maturities (i.e.15.07.2017 and 01.04.2018) to close the day at levels of 11.25/30 and 11.42/48 respectively.  Meanwhile demand for the 364 day bill continued as it was quoted at levels of 11.25/35 yesterday, ahead of its weekly bill auction due today. At last week’s auction, weighted averages remained steady at 11.35% and 10.25% on the 364 day and 182 day bills respectively while the weighted average on the 91 day bill decreased by 1 bp to 9.25%. At today’s auction Rs 1 Bn each is on offer on the 91 day and 182 day bill maturities while an amount of Rs 6 Bn will be on offer on the 364 day maturity. Given below are the closing, secondary market yields for the most frequently traded maturities, Meanwhile in money markets, Overnight call money and repo rates remained steady to average 9.49% and 8.59% respectively as money market liquidity remained at a surplus of Rs 22.35 Bn yesterday. The Open Market Operations (OMO) department of Central Bank drained out an amount of Rs.19.1 Bn at a weighted average of 8.35% by way of an overnight Repo auction.

Rupee remains steady

In Forex markets, the rupee continued to hold at levels of Rs.125.35/40 during the day as activity remained rather dull. The total USD/LKR traded volume for the previous day (12-02-13) stood at US $ 11.45 million. Given below are some forward dollar rates that prevailed in the market,  1 Month – 126.50; 3 Months- 128.45 and 6 Months- 131.35