The Sri Lanka rupee opened slightly weaker against the US dollar on Thursday as bond yields edged marginally higher, reflecting cautious sentiment across currency, debt, and equity markets.
Sri Lanka rupee opens weaker amid mixed bond yield movements
The Sri Lanka rupee opened marginally weaker in the domestic spot market on Thursday, signaling continued sensitivity in the foreign exchange market amid evolving bond yield movements and improving equity market sentiment. Dealers quoted the rupee at 310.12/18 against the US dollar, a slight depreciation from the previous session’s close of 310.05/15, highlighting subdued currency demand conditions at the start of trading.
Market participants noted that the modest weakening of the local currency reflected routine demand pressures rather than any sharp shift in underlying fundamentals. Currency dealers described early trading activity as thin, with importers selectively entering the market while exporter conversions remained measured. Despite the minor movement, the rupee continues to trade within a relatively narrow range, suggesting a degree of short-term stability supported by ongoing macroeconomic adjustments.
In the government securities market, bond yields opened marginally higher across most tenors, though movements were mixed. The bond maturing on 15 March 2028 was quoted at yields between 9.13 and 9.18 percent, indicating slight upward pressure compared with earlier sessions. Similarly, the bond maturing on 15 September 2029 traded at 9.67/9.69 percent, reflecting cautious positioning by investors.
Longer-dated securities showed varied trends. The bond maturing on 1 July 2030 opened flat at 9.75/9.80 percent, suggesting that market participants were largely comfortable with current pricing levels. Meanwhile, the bond maturing on 15 March 2031 edged lower, quoted at 9.90/10.00 percent, compared with the previous range of 9.95/10.00 percent, signaling selective buying interest at the longer end of the yield curve.
Further along the maturity spectrum, the bond maturing on 1 October 2032 was quoted at 10.35/10.40 percent, marginally higher than earlier levels, while the bond maturing on 1 November 2033 eased slightly to 10.50/10.60 percent from 10.52/10.60 percent. Dealers indicated that overall demand remained cautious, with investors balancing expectations around future monetary policy direction and inflation trends.
Foreign exchange telegraphic transfer rates reflected stable but elevated spreads. The US dollar was quoted at 306.50 for buying and 313.50 for selling. The British pound traded at 411.4513 buying and 422.8131 selling, while the euro was quoted at 355.6133 buying and 366.9765 selling. These rates underscore ongoing cost pressures in foreign currency transactions, particularly for import-dependent sectors.
Despite the marginal weakness in the Sri Lanka rupee and slightly higher bond yields, equity markets displayed a positive tone. The Colombo Stock Exchange opened firmly higher, reflecting improved investor confidence and renewed buying interest in selected counters. The All Share Price Index rose by 0.98 percent, gaining 227.63 points to reach 23,521, while the S&P SL20 advanced 1.42 percent, or 90.47 points, to 6,454.
Stock market analysts attributed the early gains to bargain hunting and expectations of stable macroeconomic conditions in the near term. They noted that improved earnings visibility, coupled with declining volatility in interest rates, has encouraged local investors to gradually increase exposure to equities. Foreign participation, while still cautious, showed signs of stabilization.
Overall, the day’s market movements reflected a cautiously balanced outlook. The slight depreciation of the local currency, modest adjustments in bond yields, and firm equity performance collectively point to a market environment that is absorbing economic signals without significant disruption. Analysts expect near-term trading to remain range-bound, with attention focused on liquidity conditions, fiscal developments, and external sector performance.
As policymakers continue to manage inflation expectations and support economic recovery, market participants will closely monitor currency trends and government securities for signals of broader shifts. For now, the Sri Lanka rupee remains under measured pressure, while financial markets appear resilient amid incremental adjustments across asset classes.