Sri Lanka rupee weaker against the US dollar on Monday as recent depreciation trends continued in the spot market, while domestic government bond yields remained largely unchanged amid cautious trading and stable market expectations.
Sri Lanka rupee weaker in spot trade while government bond yields show limited movement
The Sri Lanka rupee weaker trend persisted at the start of the week, reflecting ongoing pressure in the foreign exchange market even as government bond yields remained broadly stable. Currency dealers quoted the rupee at 309.75/80 to the US dollar in spot trade on Monday, marginally softer compared with Friday’s close of 309.70/80, extending a gradual depreciation seen over recent weeks.
Market participants attributed the mild weakness in the local currency to steady demand for dollars alongside limited near-term inflows. While the movement was narrow, traders noted that sentiment remains cautious as businesses continue to assess external payment requirements and broader macroeconomic signals. The absence of sharp volatility, however, suggests that the market is operating within an expected range rather than responding to immediate shocks.
In the domestic debt market, government bond yields were quoted with little overall change, indicating stable investor expectations. The bond maturing on February 15, 2028 was quoted at 9.06/10 percent, maintaining levels close to previous sessions. Another bond with a March 15, 2028 maturity edged slightly higher at 9.05/15 percent, compared with 9.05/10 percent previously, reflecting minor price adjustments rather than a shift in yield direction.
Longer-dated securities also showed limited variation. The bond maturing on October 15, 2029 was quoted at 9.67/72 percent, while the December 15, 2029 maturity remained flat at 9.70/75 percent. These levels suggest continued demand for medium-term instruments as investors balance yield considerations with expectations of stable monetary conditions.
Further along the curve, the March 1, 2030 bond was quoted at 9.75/80 percent, showing no notable movement from prior trading. The October 1, 2032 maturity was quoted flat at 10.35/50 percent, reinforcing the view that longer-tenor yields are holding steady despite fluctuations in currency sentiment. The longest bond cited, maturing on June 15, 2035, was quoted at 11.10/20 percent, marginally higher from 11.10/15 percent, a change considered negligible by dealers.
Foreign exchange transfer rates reflected the rupee’s softer tone against major currencies. Telegraphic transfer rates for the US dollar were quoted at 306.2500 buying and 313.2500 selling. The British pound was quoted at 409.0915 buying and 420.4097 selling, while the euro traded at 353.6042 buying and 364.9924 selling. These rates are closely watched by importers, exporters, and remittance recipients as they influence pricing and settlement decisions.
Despite currency weakness, equity market performance was mixed, underscoring differentiated investor sentiment across asset classes. The All Share Price Index on the Colombo Stock Exchange rose 0.11 percent, gaining 25.94 points to close at 23,757. This modest increase suggests selective buying interest, particularly in stocks perceived to have stable earnings prospects.
In contrast, the S&P SL20 index declined by 0.10 percent, shedding 6.81 points to close at 6,566. Analysts noted that the divergence between the broader market and blue-chip index reflects cautious positioning among institutional investors, who remain sensitive to macroeconomic indicators, currency trends, and interest rate expectations.
Overall, the combination of a slightly softer currency, steady bond yields, and mixed equity performance points to a market environment characterized by restraint rather than strong directional conviction. While the Sri Lanka rupee weaker trend remains evident, the lack of sharp movements across financial markets suggests that participants are awaiting clearer signals on external inflows, fiscal developments, and policy direction before making more decisive moves.