By Wealth Trust Securities

The yields for secondary market bonds were seen closing the day broadly steady yesterday ahead of today’s weekly Treasury bill auction. At today’s auction, the total offered amount will be at 14 month low of Rs. 6 billion consisting of Rs. 2 billion each on the 91 day, 182 day and 364 day maturities respectively. The 91 day maturity will be on offer after a lapse of three weeks. At last week’s auction, the weighted averages on both the 182 day and 364 day maturities continued its downward trend to reflect decreases of 10 basis points and 1 basis point respectively to 6.40% and 6.92%.

 In secondary bond markets, continued buying interest amidst profit taking saw yields close the day broadly steady. The limited amount of activity was witnessed on the maturities of 15.09.2019, 01.05.2020, 01.10.2022 and 01.09.2023 within the range of 8.60% to 8.64%, 8.70% to 8.74%, 9.12% to 9.18% and 9.15% to 9.20% respectively. On the long end, the 15.03.2035 continued to change hands within the range of 10.05% to 10.10% as well. 

In money markets, surplus liquidity was seen increasing to Rs. 138.77 billion yesterday. Overnight call money remained steady to average 6.30% while repo was seen increasing to average 5.81%.

 Rupee appreciates marginally

 The rupee on spot contracts appreciated marginally yesterday to close the day at Rs. 143.22/25 in comparison to its previous day’s closing levels of Rs. 143.25/35 on the back of reducing importer demand. The total USD/LKR traded volume for 30 November 2015 was $ 71.65 million. 

Some of the forward USD/LKR rates that prevailed in the market were one month – 143.55/65; three months – 144.40/60 and six months – 145.55/80.

Rupee ends steady near record low, seen firmer on remittances

(Reuters) - The Sri Lankan Rupee ended little changed near its record low on Tuesday as importer dollar demand was offset by inward remittances, dealers said.

Inward remittances for the festival season would ease the pressure on the local currency, they added.

The Rupee closed at 143.20/25 per dollar compared with Monday’s close of 143.20/35 and not far from its all-time low of 143.30 hit on Friday.

“There were inward remittances for the festival season. We expect the currency to trade steady with seasonal importer demand drying down and some expected exporter dollar conversions ahead of holidays,” said a currency dealer, asking not to be named.

Global political risk research firm Eurasia group last week said political infighting and populist policies are likely to slow down implementation of the budget’s economic liberalisation measures.

Sasha Riser-Kositsky of Eurasia in a research note said Sri Lanka’s 2016 budget highlights the government’s weak commitment to fiscal consolidation and will leave its external accounts position vulnerable.

The Rupee has dropped around 8.4 per cent so far this year and 5.9 per cent since the Central Bank allowed free-float on 4 September, Thomson Reuters data showed.

Dealers said the Central Bank had still been intervening through moral suasion after it had intervened in the market to check the fall in the rupee. Officials at the Central Bank of Sri Lanka were not available for comment.

The Central Bank sold dollars worth a net $277.95 million in October and $523.80 million in September, latest data showed. Dealers said part of that money was spent to defend the rupee.

Sri Lanka’s consumer prices in November rose to a 10-month high of 3.1 per cent from a year earlier, the Department of Census and Statistics said on Monday.

Commercial banks parked 138.77 billion rupees ($969.74 million) of surplus liquidity on Tuesday, using the central bank’s deposit facility at 6 percent, official data showed.

The Central Bank also absorbed a net 14.815 billion rupees on Tuesday, data showed, which analysts attributed to the selling of government securities.