Primary and secondary Treasury markets continue to move in opposite directions

Monday, 25 November 2013 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Continuing with its downward trend, the weighted averages (WAvgs) at the weekly Treasury bill auction declined for a ninth consecutive week to 8.10%, 8.85% and 9.75% respectively on the 91 day, 182 day and 364 day maturities for the week ending 22 November 2013. However the upward trend in secondary market bond yields continued during the week, with the liquid maturities of 1 January 2017 and the two 2018s (i.e. 1 April 2018 and 15 August 2018) hitting weekly highs of 10.88%, 11.18% and 11.30% respectively against its weeks opening levels of 10.84/86, 11.10/12, and 11.20/22.

Buying interest during the latter part of the week saw yields dip to weekly lows of 10.78%, 11.06% and 11.20% and closed the week mostly unchanged at levels of 10.82/86, 11.11/13 and 11.22/24 against its previous weeks closings. Nevertheless, the shorter end of the yield curve saw yields dip following the auction results with the two year maturity dipping to a weekly low of 10.00% and the three and a half year to 10.38% from its weeks opening highs of 10.15% and 10.47%.

In addition, continued demand for secondary market bills saw January 2014 bills change hands within the range of 8.30% to 8.50%, May 2014 within 8.75% to 9.00%, October 2014 within 9.60% to 9.73% and the latest 364 day bill within 9.65% to 9.70% during the week. Meanwhile in money market, overnight call money and repo rates remained steady within the range of 7.75% to 7.85% and 7.00% to 7.15% respectively during the week as surplus liquidity increased during the week to a high of Rs. 26.254 billion. The Open Market Operations (OMO) Department of Central Bank was seen mopping up liquidity during the week by way of seven day term repo auctions at weighted averages ranging from 7.46% to 7.48%. The rupee on spot next contracts dips during the week Activity on spot contracts dried up during the week as it was seen closing the week unchanged at Rs. 131.10/15 as importer demand for spot next contracts saw it dip during the week to a weekly low of Rs. 131.32 against its week opening level of Rs. 131.20. The total USD/LKR traded volume for the first four days of this week stood at US$ 51.63 million. Some of the forward dollar rates that prevailed in the market were one month – 131.97; three months – 133.65; and six months – 135.90.