Money market liquidity increases sharply

Friday, 2 August 2013 03:40 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities As predicted, overnight money market liquidity increased to a high of Rs. 38.10 billion following a bond maturity of Rs. 79.5 billon. A surplus volume of this extent was last witnessed during the early part of July 2013, subsequent to the SRR adjustment. A part of this excess liquidity consisting of an amount of Rs. 20 billion was mopped up by way of an overnight repo auction conducted by the Open Market Operations (OMO) at a weighted average of 7.74%, and Rs. 5 billion was absorbed by way of a term (one week) repo auction at an weighted average rate of 7.95%. Furthermore, an additional amount of Rs. 13.01 was deposited at CBSL’s repo window at a rate of 7.00%. In the meantime, the overnight call money and repo rates averaged 8.78% and 8.09% respectively. Despite the sharp increase in liquidity, secondary bond market yields increased marginally as market activity moderated. The two five year maturities were the more actively traded durations with the 15 August 2018 maturity opening the day at levels of 11.28/30 and increasing to an intraday high of 11.31% and the 1 April 2018 opening at levels of 11.22/25 and increasing marginally to an high of 11.26%. Meanwhile, in the secondary bill market the 364-day bill was quoted between a range of 10.50% and 10.55%. Rupee remains steady The USD/LKR spot rate remained broadly steady yesterday to close the day at Rs. 131.60/70. The spot next contracts closed the day steady at Rs. 131.70/75 subsequent to trading at a low of Rs. 131.75. The total USD/LKR traded volume for the previous day (31.7.13) stood at US$ 49.87 million. Some of the forward dollar rates that prevailed in the market were one month – 132.53, three months – 134.14 and six months – 136.45.

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