Demand pressure drives secondary market rates further down

Friday, 21 December 2012 00:01 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The downward trend in secondary market yields fuelled by the weekly Treasury bill auction results which decreased for a second consecutive week continued yesterday as well mainly driven by demand for the six year maturity. Yields on this particular maturity dipped by 25 basis points (bp) to an intraday low of 12.00% as volumes traded remained high. Furthermore buying pressure on secondary market bills saw the 364 day bill changing hands at levels of 11.75%, which was 43 bp lower than its weighted average. Given below are the closing, secondary market yields for the most frequently traded maturities.

Meanwhile in money markets, liquidity remained at a surplus of Rs.6.77 billion yesterday as Central Bank conducted a repo auction for a second consecutive day in order to drain out an amount of Rs. 6.5 Bn at a weighted average of 8.85%. This weighted average dipped for a second day running as well by 5 bp contributing to the bull run on secondary market rates. In line with this overnight call money and repo rates continued to dip to average 9.87% and 9.03% respectively.

Rupee gains to a seven month high

The rupee gained as much as Rs 1.10 yesterday to a seven month high of Rs 127.20 on the back of less importer demand and exporters converting dollar proceeds ahead of the season. The total dollar/rupee volume for the previous day (19/12/12) was at US $ 38.06 million. Given below are some forward dollar rates that prevailed in the market, 1 Month – 128.65; 3 Months- 130.55 and 6 Months- 133.30.