Secondary market bond yields dip marginally ahead of weekly auction

Wednesday, 29 October 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Selective buying interest saw secondary market bond yields dip marginally yesterday ahead of today’s weekly Treasury bill auction. Activity centered on the two 2018 maturities (i.e. 01.04.2018 & 15.08.2018), the 01st May 2021, the 01st July 2022 and the 01st January 2024 maturities as its yields were seen dipping to intraday lows of 7.13%, 7.15%, 7.60%, 7.92% and 8.13% respectively against its intraday highs of 7.18%, 7.20%, 7.65%, 7.97% and 8.18%. Today’s weekly bill auction will see only the 364 day maturity on offer for a second consecutive week for an amount of Rs 10 billion. At last week’s auction, the weighted average on the 364 day bill remained steady for a second consecutive week as well at 6.00%. Interestingly, the one year bond duration of 01st November 2015 was quoted at levels of 6.12% to 6.15% in secondary markets. Overnight call money and repo rates remained steady yesterday to average 6.00% and 5.54% respectively as surplus liquidity stood at Rs. 20.20 Bn. The Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs 10.00 b on an overnight basis at a weighted average of 5.63% by way of a repo auction while a further amount of Rs 10.20 b was deposited at its Standing Deposit facility rates of 5.00% and 6.50%. Rupee dips once again In Forex markets, the rupee on spot next contracts dipped once again to close the day at Rs.130.95/131.10 against its previous day’s closing of Rs.130.85/95 on the back of importer demand as spot contracts were not traded. The total USD/LKR traded volume for the 27 October 2014 was at US $ 20.10 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 131.38; three months -132.30 and six months -133.35.

Rupee slips; seen lower on rising imports

Reuters: The Sri Lankan rupee ended a tad weaker on Tuesday on importer dollar demand while moral suasion by the country’s central bank prevented a further slide, dealers said. An official at the central bank’s International Operations Department did not comment on whether the central bank had intervened in the market on Tuesday. “We don’t dictate terms to the market,” the official said on condition of anonymity, adding that the regulator intervenes only if there is excess volatility. “But we didn’t see very large volatility today.” Dealers said the market expects the local currency to face more pressure due to rising imports and lower rates. The central bank’s stable exchange rate policy would encourage more imports in the medium term, they said. The spot currency ended at 130.90/131.00 per dollar compared to Monday’s close of 130.85/90. It was largely untraded last week on moral suasion by the central bank. “There was moral suasion at 131.00; the rupee is weaker on importer dollar demand. We have seen some demand from state banks too, probably for the oil bill,” a currency dealer said. If industrial investment is seen after the tax incentives in the budget kick in, it could help the currency remain stable or even appreciate in the long run, dealers said. Sri Lanka’s Central Bank Governor Ajith Nivard Cabraal said during a Reuters’ post-Budget forum in Colombo on Monday that the trend was for an appreciating rupee. He did not elaborate. The Central Bank had last week dissuaded some banks from trading in the spot and three-day currency forwards below a pre-determined level to prevent volatility. Overseas investors sold a net Rs. 30.9 billion ($ 236.2 million) worth of government securities in the five weeks through 22 October, data from the Central Bank showed.