Primary auction rates plunge towards policy rate

Thursday, 24 July 2014 00:00 -     - {{hitsCtrl.values.hits}}


44 consecutive weeks of declines recorded

As expected, the weighted averages at yesterday’s weekly Treasury bill auction dipped further reflecting its 44th consecutive week of declines on no less than one of the three maturities. It was the 364 day bill which reflected the sharpest decline of 11 basis points to 6.68%, while the 91 day and the 182 day bill dipped by three basis points and five basis points respectively to 6.43% and 6.54%. The accepted amount on the 364 day bill was double its initial offered amount of Rs. 8 billion, which intern helped authorities accept in total an amount of Rs.18.0 billion against its initial total offered amount of Rs.10 billion. In secondary bond markets, subsequent to the release of the auction results, the decreasing trend in yields witnessed during early hours of trading reversed, due to profit taking. The two liquid maturities of 1 July 2019 and 1 July 2022 saw its yields hit intraday lows of 7.74% and 8.33% respectively before it closed the day at levels of 7.76/77 and 8.38/42. Furthermore the two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) were seen closing the day at levels of 7.50/54 and 7.58/59 respectively subsequent to hitting intraday lows of 7.50% and 7.55% as well. Furthermore, a limited amount of activity was witnessed on the nine and a half year duration of 1 January 2014 within the range of 8.65% to 8.80%.  In secondary market bills, the 364 day bill was quoted at levels of 6.60% to 6.65% post auction. Meanwhile in money markets, overnight call money and repo rates remained steady to average 6.73% and 6.51% respectively as overall surplus liquidity stood at Rs.26.55 billion. The full amount was deposited at Central Bank’s Standing Deposit Facility Rate (SDFR) of 6.50% as no Open market Operations (OMO) were conducted for a second consecutive day.

Rupee appreciates marginally

The Dollar/Rupee spot rate appreciated yesterday to close the day at Rs. 130.23/27 in comparison to its previous day’s closing of Rs. 130.26/28 on the back of export conversions outweighing importer demand. The total USD/LKR traded volumes for 22 July stood at $ 86.65 million.  Some of the forward dollar rates that prevailed in the market were: one month – 130.49; three months – 131.23; and six months – 132.25.