Weekly averages dip to five-month lows

By Wealth Trust Securities

The prevailing downward momentum in Treasury bond and bill yields continued into yesterday’s weekly Treasury bill auction, as weighted averages were seen dipping to five-month lows. 

The 182 day bill recorded the sharpest decrease of 30 basis points to 9.39%, closely followed by the 364 day by 27 basis points and the 91 day bill 16 basis points to 10.11% and 8.55% respectively. The total bid to offer ratio was seen increasing to a three-week high of 4.05:1.

The secondary bond market commenced the day following the monitory policy announcement for the month of September, where policy rates were held steady for a second consecutive month. Buying interest throughout the day leading to the weekly auction and following its outcome saw yields on the liquid maturities of 01.03.21, 01.10.22, 01.09.23, 01.08.24, the two 2025’s (i.e. 15.03.25 & 01.08.25) and the two 2026’s (i.e. 01.06.26 & 01.08.26) dip to seven-month lows of 10.90%, 11.06%, 11.20%, 11.17%, 11.23%, 11.30%, 11.25% and 11.22% respectively against its day’s opening highs of 10.92%, 11.10%, 11.23%, 11.27%, 11.32%, 11.33%, 11.34% and 11.35%. 

On the short end of the yield curve, 2018 maturities were seen changing hands within the range of 10.45% to 10.50%. Meanwhile, in secondary market bills, the 364 day bill was seen quoted at levels of 9.80/10 post auction

This was ahead of the today’s bond auctions, at where Rs. 7 billion each will be on offer on durations of a 7.10 year maturity of 01.08.2024, 9.10 year maturity of 01.08.2026 and a further Rs. 8 billion on a 4.05 year maturity of 01.03.2021.

In money markets, overnight call money and repo rates remained steady at 8.42% and 8.62% respectively as the net market deficit decreased further to Rs. 11.17 billion yesterday. The Open Market Operations (OMO) department of the Central Bank injected an amount of Rs. 13.00 billion yesterday at a weighted average of 8.49% by way of an overnight reverse repo auction.

Rupee continues declining trend  

In Forex markets, the active spot next contract depreciated further yesterday to close the day at Rs. 146.73/83 against its previous day’s closing level of Rs. 146.48/55 while spot contracts closed at Rs. 146.65/75 on the back of continued importer demand. The total USD/LKR traded volume for 27 September 2016 was $ 109.36 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 147.53/70; three months - 149.05/30 and six months - 151.65/75.