Secondary market bond activity dries up as yields edge up marginally

Friday, 25 April 2014 03:17 -     - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Activity in secondary bond markets dried up yesterday as selling interest saw yields edge up marginally in thin trade. A very limited amount of activity was witnessed on the liquid two 2018 maturities (i.e. 01.04.2018 and 15 August 2018) and the 1 July 2019 maturity at levels of 8.72% to 8.74%, 8.85% to 8.86% and 9.08% to 9.10% respectively. The 364 day and 182 day bills continued to be quoted at levels of 6.98/02 and 6.80/85 respectively in secondary markets.  Meanwhile, in money markets, the Open Market Operations (OMO) department of Central Bank successfully drained out in total an amount of Rs. 45.55 billion by way of three term Repo auctions yesterday, for 28 days at a weighted average (WAvg) of 6.71%, 63 days at 6.78% and 77 days at 6.81% respectively, valued for today. In addition, a further amount of Rs. 11.53 b was mopped up on an overnight basis by way of a Repo auction at a WAvg of 6.53% as well. Overnight call money and Repo rates averaged at 6.95% and 6.51% respectively as surplus liquidity stood at Rs. 13.51 b. Rupee continues to trade within a narrow range The two way quote on the rupee was seen fluctuating with a narrow span of Rs.130.60-Rs.130.66 yesterday. The total USD/LKR traded volume for the previous day (23 April) stood at $ 48.00 million. Some of the forward dollar rates that prevailed in the market were: one month – 131.15; three months – 132.23; and six months – 133.88.  

 Rupee edges down on light importer dollar demand

REUTERS: The rupee ended slightly weaker on Thursday as light importer dollar demand outpaced late exporter dollar selling, while dealers expected the Sri Lankan currency to remain stable in the near-term. The spot rupee ended at Rs. 130.61/63 per dollar, slightly weaker from Wednesday’s close of Rs. 130.60/61. “We see importer dollar demand coming in with inflows (remittances) drying up,” said a currency dealer, adding that the market was waiting to see if the Central Bank would defend the rupee or allow movement in the exchange rate. The benchmark 91-day Treasury bill yield dropped to its lowest since January 2007, data showed on Wednesday, a day after the central bank kept policy rates steady at multi-year lows. , Many dealers said they are surprised by the lower credit demand from the private sector even though key interest rates have been at multi-year lows since January. Private sector credit grew 4.4% year-on-year in February, the slowest since May 2010, latest data from the Central Bank showed. That compared with growth of 5.2% in January this year and 13.3% in February 2013. The Central Bank, in its monetary policy statement on Tuesday, expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic expansion. Dealers expect the rupee to trade in a range of Rs. 130.60-70 in the near future. It has been hovering between Rs. 130.55 and Rs. 130.70 since 3 March, Thomson Reuters data showed, with the Central Bank intervening to smoothen any sharp volatility.