Secondary Bond Market remains active during the week
Monday, 10 November 2014 00:00
By Wealth Trust Securities
Despite inflation for the month of October decreasing to a five year low of 1.6%, the weighted average of the 364 day bill remained stagnant at 6.00% for a fourth consecutive week at the weekly bill auction. The 182 day bill, which was offered after a lapse of two weeks, recorded a weighted average of 5.84%.
As a result, secondary market bond yields increased during the early part of the week, before being driven down towards the latter part, fuelled by substantial buying interest. The liquid maturities of 01.07.2022 and the two 2018 maturities (i.e. 01.04.2018 and 15.08.2018) were seen opening the week at levels of 7.70/75, 7.00/05 and 7.05/15 respectively, before increasing to weekly highs of 7.80%, 7.05% and 7.12%. However, subsequent buying interest resulted in yields closing the week once again at the lower levels of 7.60/63, 6.82/88 and 6.88/95.
Furthermore, activity was also witnessed consisting of the shorter durations of 15.05.17 and 01.04.16 within the range of 6.60% to 6.85% and 6.20% to 6.40% respectively, while, maturities of 01.07.2019 and 01.01.2024 traded within the range of 7.07% to 7.25% and 7.80% to 7.90%.
Meanwhile, in secondary bill markets, fresh demand resulted in the 182 day bill changing hands within the range of 5.76% to 5.78% and maturities consisting of the 364 day bill within a range 5.95% to 6.00%.
In money markets, overnight call money and repo rates remained steady to average 6.00% and 5.53% during the week as the Open Market Operations (OMO) Department of the Central Bank was seen mopping up liquidity during the week by way of three days to seventy seven days term repo auctions at weighted averages ranging from 5.70% to 6.00%.
The surplus liquidity in the market averaged Rs. 26.37 billion.
Rupee drops marginally during the week
The rupee on spot next contracts lost ground marginally during the week to close the week at Rs. 131.00/05 in comparison to its previous weeks closing levels of Rs. 130.90/00. The daily average USD/LKR traded volume for the first four days of the week was $ 52.80 million.
Some of the forward dollar rates that prevailed in the market were 1 month â€“ 131.45; 3 months â€“ 132.30 and 6 months â€“ 133.53.