Money, forex markets escape beating

Toll taken on the Colombo Stock Market over negative reports on the future of the G.S.P. + duty free concession in regard to exports to the E.U. and of U.S. billionaire Raj Rajaratnam, who has invested heavily in the local bourse, but now charged by U.S. authorities of insider trading, however did not impact on the foreign exchange and money markets, though the Colombo bourse initially took a hit before making some recovery towards the end of last week, sources told The Sunday Leader.
Tuesday’s primary Treasury (T) Bond auction saw weighted average yields (w.a.y.s) of 10.32% (tax free) fetched for Bonds maturing on July 15, 2014 and September 1, 2015 respectively, each to the value of Rs. one billion, consonant with the w.a.y.s fetched at the previous auction (i.e. the auction of October 13, 2009), which were 10.36% and 10.35% for Bonds maturing on July 15, 2014 and September 15, 2015 respectively.
The following day’s T. Bill primary auction saw yields of 91, 182 and 364 day maturity Bills fall by five b.p.s. (for 91 and 182 day) and by four b.p.s. for the latter, to fetch w.a.y.s. of 9.10%, 9.76% and 10.22% respectively.
“Yields since the beginning of the year has gone down by 100 basis points (b.p.s), the market is now adopting a ‘wait and see’ attitude, probably waiting to make their move after next month’s Monetary Board meeting where they are expecting a rate cut,” sources said.
In sluggish secondary market trading on Tuesday, yields fetched were “slightly” higher than those fetched at the primary auction of the same day, though the more popular 2013 maturing Bond was trading at the 10.15% level, they said.
However on Thursday, due to profit taking, the 2013 Bond moved up by10-15 b.p.s to be trading at 10.25-10.30% levels.
The Central Bank continued to prevent the local currency from appreciating, by buying U.S. dollars from the market at the Rs. 114.80 per unit level in spot trading, with dollar inflows making the market liquid.