Policy rates held unchanged for a tenth consecutive month

Wednesday, 19 November 2014 00:00 -     - {{hitsCtrl.values.hits}}

  • Secondary market bond yields increase further

By Wealth Trust Securities The Central Bank of Sri Lanka was seen holding its policy rates steady at 6.50% and 8.00% for a tenth consecutive month at its monthly monitory policy announcement for November yesterday, as credit disbursed to the private sector reflected a healthy increase for a second consecutive month. Activity in secondary bond markets remained moderate as continued selling interest saw yields increase for a sixth consecutive day. The two 2018 maturities (e.g. 01.04.2018 and 15.08.2018) were seen changing hands within the range of 7.00% to 7.05% and 7.08% to 7.12% respectively, the 01.07.2019 within 7.15% to 7.20%, the 01.05.2021 within 7.50% to 7.58%, the 01.07.2022 within 7.78% to 7.83% and the 01.01.2024 within 7.98% to 7.03%. Meanwhile, today’s weekly Treasury bill auction will solely see the 12 month bill on offer for an amount of Rs. 10 billion. At last week’s auction, the weighted average on the 182-day and 364-day bills remained unchanged at 5.84% and 6.00% respectively. Meanwhile in money markets, Overnight call money and repo rates remained mostly unchanged to average 6.00% and 5.50% respectively despite surplus liquidity decreasing once again to Rs. 5.88 b yesterday. The Open Market Operations (OMO) department of Central Bank was seen mopping up Rs. 2.05 b by way of a repo auction for a three-day period at a weighted average of 5.91%. Rupee remains stable In Forex markets, the dollar/rupee (USD/LKR) rate on spot next contracts remained mostly unchanged to close the day at Rs. 131.10/131.15. The total USD/LKR traded volume for the 17 November 2014 was at US $ 50.70 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 131.62; 3 Months - 132.72 and 6 Months - 134.02
 Rupee forwards weaker on importer dollar demand   Reuters: Rupee forwards ended weaker on Tuesday on importer dollar demand, though moral suasion from the Central Bank prevented a steep decline in the local currency, dealers said. Dealers said the rupee was under pressure as imports continue to rise in a stable exchange rate regime and a low interest rate environment. The rupee will likely remain weak due to rising seasonal imports, at least through November and then start to inch up in December on remittances, they added. The spot currency ended steady at 131.00/10 per dollar compared with Monday’s close. Dealers said the Central Bank defended the local currency at 131.00. Central Bank officials were not immediately available for comments. Three-day forwards, or spot-next, which was actively traded, ended weaker at 131.12/15 per dollar compared with Monday’s close of 131.10/15. Dealers said the Central Bank lowered the three-day forward moral suasion level by two cents to 131.12. Overseas investors sold a net Rs. 39.54 billion ($ 302 million) worth of Government securities in the eight weeks through 12 November, data from the Central Bank showed.