Primary auction rates continue decreasing trend at weekly auction
Wednesday, 29 April 2015 01:19
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A further Rs. 20 billion on offer through two bond auctions today
y Wealth Trust Securities
The weighted averages at yesterday’s weekly Treasury bill auction were seen continuing its decreasing trend for a third consecutive week, driven by high demand due to the prevailing high surplus liquidity in the system.
The 364 day bill reflected the sharpest decline of 11 basis points (bp) to 6.39% followed by the 91 day and 182 day bills by 4 bp and 3 bp respectively to 6.15% and 6.32%. The total accepted amount exceeded the total offered amount by Rs. 4.41 billion to record Rs. 25.41 billion.
However, despite the decline in weighted averages, secondary market bond yields were seen closing the day broadly steady yesterday as activity moderated. Activity was witnessed on the liquid maturities of 01.06.2018, 15.09.2019, 01.08.2021, 01.07.2022, 01.09.2023, 01.01.2024 and 15.03.2035 within daily lows of 7.88%, 8.09%, 8.35%, 8.45%, 8.65%, 8.73% and 8.92% respectively against its highs of 7.92%, 8.12%, 8.40%, 8.47%, 8.68%, 8.78% and 8.95%.
Meanwhile, a further Rs. 20 billion in total will be on offer today via two Treasury bond auctions for Rs. 10 billion each on the two liquid maturities of 01.06.2018 (3.01 years) and 15.03.2025 (9.11 years).
Meanwhile, in money markets, overnight call money and repo rates remained mostly unchanged yesterday to average at 6.11% and 5.97% respectively as surplus liquidity remained high at Rs.124.26 billion.
Rupee remains
mostly unchanged
The dollar/rupee rate remained mostly unchanged to close the day at Rs. 134.75/95 yesterday on its one month forward contract. The total USD/LKR traded volume for 27 April was at $ 45.50 million.
Some of the forward dollar rates that prevailed in the market were 3 Months - 135.90 and 6 Months - 137.30.
Bourse at 7-week closing high; political woes weigh
Reuters: Shares edged up to their highest close in seven weeks on Tuesday led by diversified shares, but volume was light as investors awaited cues from the political front ahead of a parliamentary vote on proposed constitutional reforms.
The main stock index ended up 0.13% at 7,134.43, its highest close since 9 March. It has gained 3.38% since the central bank cut key rates on 15 April, while yields on t-bills have fallen 41-51 basis points since then. Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe’s party does not have a majority in Parliament and President Maithripala Sirisena promised to dissolve Parliament after the end of his 100-day program on 23 April.
The passage of reform measures, including establishing independent police, Judiciary, and election and public service commissions, is seen as a test for Sirisena’s Government.
“Market was volatile with continued upward trend, but investors are still waiting for a stable political framework,” said Reshan Wediwardana, research analyst at First Capital Equities Ltd.
Investors awaited the outcome of the vote on constitutional reforms which could help boost investor sentiment, dealers said.
The day’s turnover was Rs. 756 million ($ 5.69 million), compared with this year’s daily average of around Rs. 1.07 billion.
The market saw a net foreign inflow of Rs. 21.2 million worth of shares on Tuesday, extending the net foreign inflow so far this year to Rs. 3.8 billion. Analysts said the market could be dull until the perception of political uncertainty is addressed and many investors were in a wait-and-watch mode before the parliamentary elections.
Shares of Hemas Holdings Plc rose 0.39%, while Distilleries Company of Sri Lanka Plc gained 1.49%. Some analysts said the markets would stay volatile until parliamentary elections are announced.
The index lost 6.6% last month, its biggest monthly drop since October 2012, as investors sold holdings to settle margin trades amid concerns about political stability and a rise in interest rates.
Rupee forwards slip on importer dollar demand
Reuters: Rupee forwards slipped on Tuesday as importer dollar demand outpaced early selling of the greenback by banks, while dealers expect the local currency to remain under pressure due to lower interest rates.
Actively a one-month forwards ended at 134.80/135.00 per dollar, compared with Monday’s close of 134.80/90. “Importer demand came into the market. The depreciation pressure is rising day by day amid declining interest rates,” said a currency dealer asking not to be named.
Yields on treasury bills fell three to 11 basis points (bps), extending their decline to 41-51 bps since the central bank cut key rates on 15 April. Two-week and one-week forwards were steady at 133.90/134.00 and 133.60/70 per dollar, respectively.
The Central Bank through moral suasion prevented the spot rupee from dropping below 132.90/133.20, a limit it set in February. Central Bank officials were not available for comment.Currency dealers said political uncertainty has been weighing on investor confidence and putting pressure on the exchange rate after President Maithripala Sirisena’s 100-day program ended on Thursday.
Sirisena, who promised to dissolve Parliament after the end of his 100-day program on 23 April, on Monday tabled constitutional reform measures, which are expected to be voted later on Tuesday. Currency dealers said the rupee would also be under pressure through June as credit growth was expected to hit a peak due to lower interest rates.
