The Sri Lanka rupee opened flat at 304.80/90 to the US dollar as trading began on Monday, while government bond yields moved sharply lower across maturities amid increased market activity.
Rupee opens flat while government bond yields fall sharply and market activity rises
The domestic currency opened stable on Monday, with the Sri Lanka rupee quoted at 304.80/90 in the spot market as dealers reported steady trading conditions. While the currency held its ground, government bond yields fell noticeably across the curve as investors responded to heightened market turnover and demand for government paper.
Short-dated and mid-term benchmarks saw modest declines. A Treasury note maturing on 15 September 2027 was quoted around 8.60/70 percent, easing from earlier levels, while the 15 February 2028 paper was offered near 8.90/95 percent. Securities maturing through 2029 and 2030 also registered softer yields, with the 15 June 2029 and 15 September 2029 papers trading in the mid-9 percent range and the 1 July 2030 bond quoted at roughly 9.60/62 percent. Longer-dated instruments showed similar downward moves, with the 15 March 2031 paper holding near 9.85/95 percent and the 15 December 2032 and 1 November 2033 maturities trading slightly lower than previous levels.
Market participants noted that bond activity picked up ahead of a scheduled Treasury bill auction on 12 November, when 77,000 million rupees of paper will be offered. Dealers said the auction timetable, combined with active secondary market flows, contributed to the compression in yields as investors repositioned portfolios.
Foreign-exchange telegraphic transfer rates indicated relatively wider spreads for major currencies against the rupee: the US dollar was cited with buying and selling rates around 301.3000 and 308.3000 respectively, while the euro and pound sterling showed similar two-way markets consistent with cautious but constructive sentiment.
Equity markets opened on a positive note alongside the fixed-income rally. The All Share Price Index climbed 0.91 percent, gaining 211.45 points to trade near 23,549, while the S&P SL20 advanced approximately 1.17 percent to around 6,455. Analysts said the simultaneous rise in stock indices and fall in bond yields reflects short-term liquidity flows into both government paper and select equity counters, underlining a risk-on undertone among domestic investors.
Overall, the session underscored a contained currency environment for the Sri Lanka rupee coupled with a pronounced decline in government bond yields, driven by active trading ahead of primary market supply and ongoing demand for fixed-income instruments.