Sri Lanka rupee opened slightly weaker against the US dollar on Monday, extending a recent depreciating trend as government bond yields remained largely unchanged. Currency dealers said the early movement reflected cautious market sentiment amid stable domestic debt conditions.
Sri Lanka rupee softens early while bond yields stay steady
The Sri Lanka rupee opened marginally weaker in spot trading on Monday, quoted at 309.10/30 to the US dollar, compared with 309.00/30 at the previous close, according to market participants. The opening levels underscored a gradual softening of the local currency that has been evident over recent weeks, even as domestic bond markets showed little directional change.
Traders noted that the currency’s movement remained modest, suggesting the absence of abrupt external or domestic shocks. Instead, the rupee’s depreciation appears to reflect routine demand for dollars and ongoing adjustments following earlier appreciation phases. Market participants said importer demand and seasonal foreign currency requirements continue to influence near-term trading levels, although volatility remains contained.
Government securities, meanwhile, were broadly steady, indicating stable expectations around inflation, interest rates, and fiscal conditions. A bond maturing on June 15, 2029 was quoted at 9.50/9.55 percent, unchanged from previous levels. Similarly, the October 15, 2029 maturity was indicated at 9.60/9.65 percent, while the December 15, 2029 bond traded at 9.65/9.70 percent.
Slight easing was observed in some longer-dated maturities. The July 1, 2030 bond was quoted at 9.70/9.75 percent, marginally lower than the earlier 9.72/9.75 percent. Dealers attributed the small adjustment to selective buying interest rather than a broader shift in yield expectations. The March 15, 2031 bond remained stable at 9.90/10.00 percent, reflecting continued investor confidence in medium-term debt instruments.
Further along the yield curve, the October 1, 2032 bond was quoted at 10.30/10.35 percent, down slightly from the previous 10.33/10.36 percent. Analysts said the consistency across maturities suggests that investors are largely comfortable with the current monetary policy stance and the government’s debt management outlook, despite ongoing economic adjustments.
In the foreign exchange market, telegraphic transfer rates also reflected the rupee’s softer bias. The US dollar was quoted at 305.7500 buying and 312.7500 selling. The British pound traded at 409.6281 buying and 420.9463 selling, while the euro was quoted at 354.1674 buying and 365.5556 selling. Dealers said cross-currency movements were largely in line with global trends, with no unusual local distortions.
Equity markets offered a more positive tone, with the Colombo Stock Exchange recording gains in early trading. The All Share Price Index rose 0.49 percent, gaining 116.22 points to reach 23,770. The S&P SL20 index also advanced, up 0.52 percent or 33.96 points, closing at 6,536. Market participants said the upward movement reflected selective buying in blue-chip stocks and continued optimism around corporate earnings resilience.
The contrast between a mildly weaker Sri Lanka rupee and firmer equity indices highlights the nuanced nature of current market conditions. While the currency continues to adjust to underlying demand dynamics, bond yields and stocks suggest relative stability and measured investor confidence. Analysts expect the rupee’s near-term direction to remain closely tied to external inflows, trade-related dollar demand, and global currency movements rather than abrupt domestic policy changes.
Overall, Monday’s market opening painted a picture of gradual currency softness set against a backdrop of steady bond yields and cautiously positive equity sentiment, reinforcing expectations of a controlled and orderly market environment in the days ahead.