The Sri Lanka rupee strengthened on Monday, opening at 302.10/20 to the US dollar—firmer than Friday’s 302.45/50—as bond yields eased and the Colombo bourse traded higher following a recent sovereign credit rating upgrade.
Sri Lanka rupee gains as bond yields fall and Colombo stocks climb after sovereign rating upgrade
The market reacted to the sovereign credit rating upgrade with a clear risk-on tone: the Sri Lanka rupee firmed modestly against the US dollar while government bond yields moved lower across several tenors. Dealers reported market activity concentrated in 2029–2033 maturities, where investors sought to lock in yields before the central bank’s upcoming decisions.
A government bond maturing on 15 December 2029 was quoted at 9.48/52 percent, down from 9.50/54 percent, while the 1 July 2030 paper traded at 9.66/70 percent, easing from 9.70/75 percent. The 15 March 2031 bond held flat at 10.00/05 percent, and longer tenors including the 15 December 2032 and 1 November 2033 were quoted around 10.35/45 percent and 10.65/70 percent respectively. The shift in yields signals a modest reduction in the sovereign risk premium as investor sentiment improved after the rating action.
Foreign exchange telegraphic transfer rates showed a similar move: the dollar was quoted at 298.75 (buying) and 305.75 (selling), the British pound at 401.2340/412.5958, and the euro at 348.2418/359.6050. The firmer Sri Lanka rupee reflects both improved market confidence and shorter-term portfolio flows into local fixed income and equities.
Equities advanced in tandem. The Colombo Stock Exchange indices traded in the green with the ASPI up 0.93 percent (196.48 points) to 21,281 and the S&P SL20 rising 1.15 percent (68.82 points) to 6,064. Market breadth strengthened as investors rotated into rate-sensitive and financial names on the back of the ratings news.
Looking ahead, the central bank announced an auction of Rs. 38,000 million in Treasury bills scheduled for 24 September 2025. The Monetary Policy Committee will also deliver its fifth policy decision of the year on the same day at 7:30 a.m., followed by a press conference from Governor Nandalal Weerasinghe at 11:30 a.m., which will be livestreamed across major social platforms. These events will be closely watched for guidance on liquidity management and interest-rate direction, both of which could influence the Sri Lanka rupee and local bond yields in the near term.
In summary, the sovereign rating upgrade provided an immediate lift to market sentiment — the Sri Lanka rupee strengthened, bond yields dropped slightly, and stocks moved higher — yet upcoming auctions and the central bank’s policy statement on 24 September 2025 could re-shape trends depending on policy signals and auction results.