Bond yields increase marginally ahead of monetary policy announcement

Friday, 12 December 2014 04:21 -     - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Secondary market bond yields were seen increasing marginally yesterday for the first time in two days on thin volumes ahead of today’s monetary policy announcement for the month of December. The eight year maturity of 01.07.2022 was seen increasing to an intraday high of 8.15% followed by the two four-year maturities of 01.04.2018 and 18.08.2018 to highs of 7.07% and 7.20% respectively. In secondary bill markets, the 182 day and 364 day maturities were seen quoted at levels of 5.80% to 5.84% and 5.95% to 6.02% respectively. Meanwhile in money markets, overnight call money and repo rates remained steady to average 5.95% and 5.45% respectively despite overall surplus liquidity decreasing to Rs. 2.89 billion yesterday. The total amount was deposited at Central Bank’s Standing Deposit Facility as no cash valued auctions under its Open Market Operations (OMO) were conducted yesterday. However the OMO department was seen mopping up an amount of Rs. 35.41 billion via two term repo auctions at yields of 6.08% for 56 days and 6.12% for 77 days, valued today. Rupee stable The rupee on the forward spot next/next contracts were seen closing the day steady at Rs. 131.95/98. The total USD/LKR traded volume for 10 December 2014 was at $ 21.30 million. Some of the forward dollar rates that prevailed in the market were one month - 132.50; three months - 133.60 and six months - 134.80.

 CB seen keeping key rates at record lows on Friday

Reuters: Central Bank is expected to hold its key monetary policy rates steady at record lows on Friday for a 11th straight month as policymakers aim to sustain an economic rebound, a Reuters poll showed. The repurchase and reverse repurchase rates are at 6.50% and 8.00%, respectively. Many analysts say the central bank may opt to keep the rates steady ahead of a snap presidential poll on Jan. 8. In September, the central bank paid commercial banks using its standing deposit facility only 5% interest after the banks had made deposits   three times in a calendar month at the current 6.50% rate, a move seen by many banks as an effective rate cut. Between December 2012 and January 2014, the central bank cut the repurchase rate, or repo rate, by 125 basis points (bps) and the reverse repurchase rate, the reverse repo, by 175 bps to stimulate economic growth. The pace of growth picked up to 7.3% last year from 6.3% in 2012. The central bank has estimated growth at 7.8% this year.