Mixed fortunes witnessed across the yield curve during the week

Monday, 14 July 2014 01:45 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The phenomenon of yields on the longer end of the yield curve dipping as yields on the belly end of the yield curve was increasing, is what was witnessed in secondary bond markets during the week ending 11 July. Activity continued to be very high during the week, as yields on the liquid two 2018s (i.e. 1 April 2018 and 15 August 2018) were seen increasing weekly highs of 7.90% and 8.00% respectively against its previous weeks closings of 7.77/82 and 7.88/94 closely followed by the liquid two 2019 (i.e. 1 July 2019 and 15 September 2019) as its yields were seen increasing to weekly highs of 8.20% and 8.24% respectively as well against its

previous weeks closings of 8.05/10 and 8.10/15. In addition, yields on the eight year duration of 1 July 2022 were seen increasing as well to a weekly high of 9.20% while the three year duration of 15 May 2017 increased to 7.45%. However in contrast to this, yields on the longer tenure durations ranging from the nine and a half year duration of 1 January 2024 to the 15 year duration of 1 May 2019 was seen decreasing with the former dipping to a weekly low of 9.30% against its weekly high of 9.40% while the latter dipping to a low of 10.50% against a high of 10.60%. Speculation on the outcome of July’s monetary policy announcement due today (Monday) was seen as the main reason behind this phenomenon according to market sources.

People’s Bank introduces special loan facility for Ramadan seaso

People’s Bank has introduced a special loan scheme especially for customers who celebrate Ramadan. With this loan facility, permanent employees of both State and private sectors can obtain a loan up to Rs. 100,000 at an interest rate of 14%. Islamic customers are able to obtain a loan for a repayment period of 12 months at an equal monthly instalment of Rs. 8,978.71 for a loan amount of Rs. 100,000. Whilst a single guarantor is adequate to apply for the loan, the facility will be available until 15 August. Customers who qualify for this loan facility can walk in to any People’s Bank branch and avail themselves of this great offer.

Furthermore, at the weekly Treasury bill auction the weighted average on the 364 day bill was seen recording an eighteen and a half year (since 1996) low of 6.91%. Meanwhile in money markets, average surplus liquidity increased to Rs. 30.32 billion during the week in comparison to its previous week’s average of Rs. 7.53 b as overnight call money and repo averaged 6.86% and 6.54% respectively for the week. Rupee appreciates during the week In forex markets, the USD/LKR rate was seen appreciating during the week ending 11 July to close the week at levels of Rs 130.20/22 against its previous weeks closing of Rs. 130.26/27 on the back of selling interest on forward dollar contracts and a drop in forward dollar premiums. The daily average USD/LKR traded volume for the first four days of the week was at $ 107.83 million. Some of the forward dollar rates that prevailed in the market were one month – 130.38; three months – 130.88; and six months – 131.83.