Bond yields edge up

• Rupee holds

By Wealth Trust Securities

The secondary bond market commenced the week on a dull note, but activity was seen picking up at the latter part of the day, while yields crept up in comparison to its previous week’s closings. This was on the back of market participants adopting a wait-and-see approach and intermittent bouts of profit taking. However, renewed buying interest was seen at the elevated levels, curbing the upward movement. Trading continued to be predominantly on the short end of the yield curve.  The 2028 tenors (15.03.28, 01.07.28 and 15.12.28) were seen hitting intraday highs of 12.25% as against intraday lows of 12.05%, with substantial volumes transacted. Similarly, 2026 tenors (01.06.26 and 01.08.26) were seen hitting intraday highs of 11.00% as against lows of 10.85%. Additionally, trades were seen on the maturities of 2025’s (15.01.25 and 01.07.25), 2027’s (01.05.27 and 15.09.27) and 15.05.30 within the ranges of 10.00% to 10.25%, 11.75% to 11.90%, 12.25% to 12.40% respectively.

Meanwhile in secondary market bill transactions, May (approximately 3 months) and late July (approximately 6 months) 2024 maturities were seen changing hands at 9.75% and 9.90% respectively with sizeable volumes transacted. Additionally, trades were seen on short term bills with March/April 2024 maturities changing hands at levels of 9.50% to 9.85%, on the back of large volumes once again.The total secondary market Treasury bond/bill transacted volume for 16 February was Rs. 16.47 billion.

In money markets, the weighted average rates on overnight call money and repo stood at 9.19% and 9.35% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 50.00 billion at the weighted average rates of 9.51%.

The net liquidity deficit stood at Rs. 5.18 billion yesterday as an amount of Rs. 49.66 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10.00% against an amount of Rs. 94.48 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 9.00%. 

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day broadly steady at Rs. 312.15/312.25 against its previous day’s closing level of Rs. 312.20/312.35. The total USD/LKR traded volume for 16th February was $ 82.43 million.