Overnight liquidity shortfall to ease off

Tuesday, 23 October 2012 00:42 - - {{hitsCtrl.values.hits}}

The shortage in overnight money market liquidity is expected to ease off today with the Central Bank injecting Rs. 6 billion for a period of 31 days at weighted average of 9.83% by way of a term reverse repo auction conducted by its Open Market Operations (OMO) department.

Wealth Trust Securities said this is the second such auction conducted within a span of two weeks.

However, market liquidity remained at a net deficit of Rs.6 billion yesterday, with an amount of Rs. 4 billion injected on an overnight basis at a weighted average of 9.70%.

Furthermore, an amount of Rs. 2.15 billion was accessed from its discount window rate of 9.75% while Rs. 0.154 billion was deposited at its repo window rate of 7.75%. Overnight call money and repo rates remained steady to average 10.52% and 9.67% respectively, Wealth Trust said.

It also said that v very limited amount of activity was witnessed in the secondary bond market yesterday, with thin volumes seen changing hands on the five-year and seven-year maturities as its yields edged up by around five basis points (bp). Market participants were seen adopting a wait-and-see policy ahead of CBSL monthly monitory policy announcement due today.

The rupee meanwhile dipped to an intraday low of Rs. 129.85 yesterday on the back of considerable import demand from its opening levels of Rs. 129.20. However, selling interest at these levels, mainly on forward dollar contacts by exporters curtailed the dip on the rupee.

The total US$/LKR volume for the previous day (17 October 2012) was at US$ 80.30 million. Some of the forward dollar rates that prevailed in the market were: one month – 130.47; three months – 132.80; and six months – 135.87.