Bond yields increase marginally in moderate trading

• Rupee dips below Rs.179

By Wealth Trust Securities

The secondary bond market witnessed a day of moderate trading yesterday as yields were seen increasing marginally. 

The two 2021s (i.e. 01.08.21, 15.10.21 and 15.12.21), 15.07.23, two 2024s (i.e. 15.03.24 and 15.06.24) and 01.08.26 saw its yields increase to intraday highs of 9.00% each, 9.05%, 9.78%, 10.00% each and 10.15% respectively against its previous day’s closing levels of 8.95/00, 8.95/05, 9.00/08, 9.68/75, 9.90/95, 9.93/98 and 10.05/12. 

Activity along the rest of the yield curve remained rather dull. Meanwhile, January and March 2020 maturities in the secondary bill market were seen changing hands at levels of 8.00% and 7.99% respectively.

This was ahead of today’s monetary policy announcement, the fifth for the year 2019, due at 7:30 a.m. The Central Bank of Sri Lanka kept policy rates unchanged at its announcement on 11 July.

The total secondary market Treasury bond/bill transacted volumes for 21 August was Rs. 14.60 billion. 

In money markets, the overnight call money and repo rates averaged 7.75% and 7.91% respectively as the OMO (Open Market Operations) Department of the Central Bank of Sri Lanka was seen injecting an amount of Rs. 4.55 billion by way of an overnight reverse Repo auction at a weighted average rate of 7.60%. 

It further injected an amount of Rs. 7.75 billion by way of seven day Reverse Repo auction at a weighted rate of 7.55% as well. The overnight net liquidity surplus stood at Rs. 22.69 billion yesterday.

Rupee loses further

 The Interbank USD/LKR rate on spot contracts was seen deprecating further to close the day at Rs.179.30/60 against its previous day’s closing levels of Rs. 178.85 on the back of continued buying interest by banks and importer demand.

The total USD/LKR traded volume for 21 August was $ 97.25 million

Given are some forward USD/LKR rates that prevailed in the market: One month – 179.90/10; three months – 180.80/00; six months – 182.40/60.