Money market liquidity tops Rs. 12 b for first time in 3 months

Money market liquidity on an overnight basis increased considerably to Rs. 12.99 billion yesterday, a figure last witnessed three months back, Wealth Trust Securities said.

This development was as the Central Bank mopped up Rs. 9.71 billion by way of a repo auction conducted by its Open Market Operations (OMO) department at a weighted average of 9.33% and a further Rs. 3.28 billion at its window rate of 7.75%. Interestingly, the increase in liquidity comes a day ahead of a Rs. 6 billion term reverse repo auction and a Rs. 22 billion weekly bill auction settlement, both of which are due today.

According to market sources, dollar inflows into the system on behalf of a debenture issue by a State bank coupled with State overdrawn accounts been settled was seen as the reasons behind the increase in liquidity. However, overnight call money and repo rates remained steady yesterday to average 10.55% and 9.63% respectively.

In secondary bond markets, continued buying interest on the five-year maturity saw its yields dip marginally yesterday to an intraday low of 12.40% on the back of very thin volumes, Wealth Trust Securities said

 However, no other movements were witnessed along the yield curve as continued selling pressure was seen on secondary market bills.

The rupee meanwhile after three consecutive days of remaining steady at levels of Rs. 130.30, appreciated marginally yesterday by around 10 cents to an intraday high of 130.20 on the back of dollar inflows into the system. The total US$/LKR volume for the previous day (21 November 2012) stood at US$ 38.39 million.