Overnight liquidity increases above Rs.8 b for the first time in two months

By Wealth Trust Securities

Money market liquidity on an overnight basis increased considerably yesterday as Central Bank conducted a repo auction to drain Rs.9.085 billion from the system at a weighted average of 9.32%.

However net liquidity was at Rs 8.2 Bn due to Rs 1 Bn been accessed from CBSL discount window rate of 9.75%. This could be due to the lending restriction between market participants. Dollar inflows into the system on behalf of a Debenture issue by a state bank were seen as the reason behind the increase in liquidity, according to market sources. Overnight call money and repo rates remained steady once again to average 10.58% and 9.64% respectively.

In secondary bond markets, a limited amount of activity was witnessed yesterday, with the five year and six year bond maturities changing hands at levels of 12.45% - 12.50% and 13.00% respectively. In addition, the 182 day bill was seen changing hands at levels of 12.10% in secondary markets ahead of its weekly bill auction due on Wednesday.  The Public Debt Department (PDD) of Central Bank announced in total an amount of Rs 19 Bn on offer for the auction, in comparison to its last week’s offered amount of Rs 14 Bn. At last week’s auction, weighted averages were seen increasing on the 182 day and 364 day bills by 3 and 8 basis points (bp) respectively, while the 91 day bill dipped by 1 bp.

Rupee dips above Rs 130 once again

The rupee lost ground by 27 cents yesterday to an intraday low of Rs 130.27 in comparison to Fridays closing level of Rs 130.00, still below the Rs 130.90 level witnessed prior to the budget reading. The total USD/LKR volume for the previous day stood at US $ 27.95 million.