Sri Lanka rupee opened weaker against the US dollar on Thursday, while government bond yields remained broadly steady. Currency dealers reported mild depreciation in early spot trading amid ongoing Treasury bond auctions.
Sri Lanka rupee slips against dollar as bond yields hold firm
Sri Lanka rupee was quoted at 309.38/45 to the US dollar in the spot market, compared to 309.35/40 in the previous session, indicating marginal depreciation in early trade. The movement reflects subdued demand-supply imbalances in the foreign exchange market, with dealers noting limited volatility during morning transactions.
Telegraphic transfer rates showed the US dollar at 305.9000 buying and 312.9000 selling. The British pound was quoted at 416.0082 buying and 427.4998 selling, while the euro stood at 361.0840 buying and 372.6320 selling. The spread between buying and selling rates suggests stable liquidity conditions, although mild pressure persisted on the local currency.
Despite the softer opening in the currency market, Sri Lanka’s government bond yields were largely unchanged from the previous close, indicating stable investor sentiment in the domestic debt market. A Treasury bond maturing on 15 February 2028 was quoted at 8.92/97 percent, reflecting steady pricing in the short-to-medium tenor segment.
The 15 December 2029 maturity edged slightly higher to 9.48/50 percent from 9.47/50 percent, while the 15 March 2030 bond was quoted at 9.58/62 percent. The 15 March 2031 bond saw a modest decline to 9.71/80 percent from 9.75/80 percent, indicating selective buying interest in that tenor.
Longer-dated maturities showed marginal adjustments. The 15 December 2032 bond was quoted at 10.12/15 percent, and the 1 June 2033 maturity remained flat at 10.42/47 percent. The 15 June 2034 bond ticked up slightly to 10.64/67 percent from 10.63/67 percent, while the 15 June 2035 bond increased to 10.75/77 percent from 10.70/75 percent. The 1 July 2037 maturity was quoted at 10.95/98 percent.
The relatively stable yield curve suggests that investors are maintaining a wait-and-see approach amid ongoing fiscal adjustments and monetary normalization efforts. With inflation trends moderating and policy rates stabilizing in recent months, bond market participants appear to be pricing in steady macroeconomic expectations in the near term.
An auction of 51,000 million rupees in Treasury bonds was underway, which could influence secondary market dynamics depending on demand levels and accepted yields. Primary auctions often provide signals on liquidity conditions and investor appetite, particularly for medium- to long-term government securities.
In the equity market, the Colombo Stock Exchange opened marginally higher. The All Share Price Index gained 0.09 percent, or 22.53 points, to 23,678. The S&P SL20 index rose 0.06 percent, or 3.72 points, to 6,617. The modest uptick suggests cautious optimism among equity investors despite currency softness.
The divergence between a slightly weaker rupee and steady bond yields reflects balanced capital flows and contained volatility in domestic financial markets. Exchange rate movements remain sensitive to import demand, remittance inflows, and foreign portfolio activity, while bond yields are influenced by fiscal financing needs and inflation expectations.
Market participants will closely monitor the outcome of the Treasury bond auction and any shifts in dollar liquidity in the coming sessions. A sustained increase in government borrowing costs could pressure yields upward, while stronger inflows or export receipts may help stabilize the currency.
For now, the Sri Lanka rupee’s modest depreciation appears limited in scale, and fixed-income markets continue to trade within a narrow range. The interplay between exchange rate stability, sovereign borrowing requirements, and investor confidence will remain central to near-term financial market performance.