Primary market yields continue steady decline

Wednesday, 11 June 2014 00:00 -     - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Weighted averages (WAvgs) at yesterday’s weekly Treasury bill auction continued their steady descending trend as all three maturities reflected dips of 1 basis point (bp) each to 6.54%, 6.72% and 7% respectively on the 91-day, 182-day and 364-day maturities. The 364-day bill continued to reflect the bulk of the total accepted amount as it represented 85% of the total Rs. 14.54 billion. Meanwhile in secondary bond markets, activity continued to remain very high yesterday pre and post auction as yields were seen declining further. A bulk of the activity surrounded the two 2019 maturities (i.e. 01.07.2019 & 01.11.2019) as it was seen changing hands within daily highs of 8.73% each to lows of 8.67% and 8.69% respectively. This was closely followed by the two 2018 maturities (i.e. 01.04.2018 and 15.08.2018) within 8.22% to 8.25% and 8.30% to 8.32% respectively, the 2021 within 9.35% to 9.37% and the 2022 within 9.78% to 9.80%. In addition, the shorter end of the curve reflected activity as well with 2015 maturities changing hands with 7.14% to 7.18%, 2016‘s within 7.25% to 7.35% and 2017’s within 7.62% to 7.65%. In secondary bill markets, the latest 364-day bill was seen quoted at levels of 6.95% to 6.98% post auction. Meanwhile in money markets, the total surplus of Rs. 8.95 billion was deposited at CBSL’s Standing Deposit Facility Rate (SDFR) of 6.50% as the Central Bank refrained from conducting any auctions under its Open Market Operations (OMO) yesterday. This in turn kept overnight call money and repo rates steady to average 6.95% and 6.53% respectively. Rupee holds steady The USD/LKR rate remained steady to close the day unchanged at Rs. 130.26/28 yesterday as markets were in equilibrium. The total USD/LKR traded volume for the previous day (9 June) stood at $ 87.35 million. Some of the forward dollar rates that prevailed in the market were 1 Month: Rs. 130.71, 3 Months: Rs. 131.54 and 6 Months: Rs. 132.74.

 Rupee steady near 1-year high; gains curbed

REUTERS: The rupee ended steady near a one-year high on Tuesday as dollar sales by banks and exporters were offset by mild importer demand, while two state banks bought the greenback to prevent any sharp gains in the local currency. The rupee ended unchanged at Rs. 130.26/28 per dollar, its highest since 28 June, 2013. The two state banks, through which the Central Bank intervenes to direct the market, bought dollars at Rs. 130.26 as the Central Bank allowed a gradual appreciation in the local currency to prevent shocks, dealers said. The Central Bank had bought dollars at Rs. 130.35 on 30 May and started lowering its buying rate since then, allowing a gradual appreciation. Central Bank Governor Ajith Nivard Cabraal told Reuters on Friday that the rupee was facing some appreciation pressure and the bank was allowing the trend on a gradual basis to let all stakeholders adjust to the changes, without any shocks. He had said earlier that the bank would keep intervening in the currency market to prevent a rapid rise in the rupee. The Central Bank had absorbed over $ 400 million as of 27 May this year to prevent a sharp gain. Dealers said the Central Bank intervention has prevented gains in the currency and they expect it to face upward pressure until credit growth and imports pick up.

Bourse at near 2-week high; correction expected

REUTERS: Shares ended at their highest close in nearly two weeks, helped by banking stocks, but the market could undergo a technical correction as retail investors are waiting for profit-taking, stockbrokers said. The main stock index ended 0.11%, or 6.61 points, firmer at 6,293.64, its highest close since 29 May. Continued foreign buying and expectations of interest rates coming further down have boosted sentiment and the market has been on a rising trend since late February. “We expect retail profit-taking in the coming days,” a stockbroker said on condition of anonymity. “The market has been on the rise for a long time and retail investors have been waiting for better price to sell. We see some selling pressure on certain shares.” The bourse saw net foreign inflow for the ninth straight session. Foreign investors bought Rs. 5 million worth of shares on Tuesday extending the net inflow of past nine days to Rs. 3.27 billion ($ 25.11 million) worth of shares. They have been net buyers of Rs. 5.11 billion so far this year. Turnover was Rs. 818.4 million, below this year’s daily average of Rs. 1 billion. Analysts said the market expects a further fall in interest rates after Central Bank Governor Ajith Nivard Cabraal told Reuters on 30 May that the Central Bank was creating room to cut interest rates further. The Central Bank will announce its June monetary policy rates on 18 June. Shares in Lanka Orix Leasing Company PLC, which boosted the overall index, rose 5.59% to Rs. 85 a share. Market heavyweight John Keells Holdings fell 0.13% to Rs. 234.50 after Capital Alliance in a note recommended investors to sell the conglomerate’s shares, citing lower-than-expected earnings.