The Sri Lanka rupee weakened slightly against the US dollar on Wednesday, reflecting mild depreciation in the currency market, while government bond yields stayed largely steady as investors awaited the results of an ongoing Treasury bill auction.
Sri Lanka rupee weakens marginally against the dollar while government bond yields remain steady amid cautious market sentiment.
The Sri Lanka rupee traded softer against the US dollar on Wednesday, with dealers quoting the currency at 303.20/25 per dollar, compared with 303.05/15 the previous day. The minor depreciation reflects continuing demand for dollars in import settlements and routine corporate transactions.
Traders said that despite the slight decline, the rupee remained within a narrow trading band as the Central Bank of Sri Lanka (CBSL) carefully managed market liquidity. Dealers noted that market movements were modest and that intervention measures were helping maintain overall currency stability amid external pressures.
A Treasury bill auction totaling Rs. 70 billion was underway, a regular part of the government’s short-term funding plan. Market participants said the outcome of this auction could influence near-term liquidity trends and short-term rates in the domestic market.
Bond yields across most maturities remained largely steady, showing little reaction to the rupee’s minor movement. A bond maturing on 15 December 2026 was quoted at 8.30/35 percent, slightly higher than 8.25/35 percent on Tuesday. The 15 September 2027 bond traded at 8.80/85 percent, up from 8.75/85 percent, while a bond maturing on 01 July 2028 was quoted at 9.25/30 percent, compared to 9.20/30 percent previously.
The 15 December 2029 issue recorded 9.65/73 percent, up marginally from 9.65/70 percent, while longer-term maturities such as 15 December 2032 and 01 November 2033 stayed unchanged at 10.50/65 percent and 10.67/75 percent, respectively.
Dealers said the flat trend in long-term yields indicated a sense of investor confidence in Sri Lanka’s medium-term outlook, supported by controlled inflation, stable interest rates, and gradual economic recovery. While demand for shorter-tenor securities remained robust, longer-term bonds reflected steady risk appetite among institutional investors.
In the foreign exchange market, telegraphic transfer (TT) rates showed the US dollar trading at Rs. 299.70 (buying) and Rs. 306.70 (selling). The British pound stood at Rs. 399.72 (buying) and Rs. 411.08 (selling), while the euro was quoted at Rs. 345.52 (buying) and Rs. 356.88 (selling). Analysts said the variations reflected ongoing adjustments in global currency markets influenced by the US Federal Reserve’s rate signals and oil price fluctuations.
Meanwhile, the Colombo Stock Exchange (CSE) opened on a positive note. The All Share Price Index (ASPI) rose 0.38 percent, or 86.41 points, to reach 22,870, while the S&P SL20 index increased 0.16 percent, or 9.79 points, to 6,293. Dealers attributed the modest gains to improved investor sentiment and selective buying across key sectors.
Market analysts say that although the rupee has shown slight weakness this week, Sri Lanka’s overall financial conditions remain stable. Foreign remittances, tourism inflows, and improved trade receipts have supported the country’s external balance. The rupee is expected to trade within a controlled range in the short term, with the Central Bank likely to continue fine-tuning market operations.
Economists believe the bond market’s resilience signals strong confidence in the government’s fiscal consolidation measures. The nearly flat yield curve, especially across the 2029 to 2033 maturities, reflects the perception that inflation will remain under control and interest rates will stabilize.
Overall, Wednesday’s market performance underscores a cautiously steady outlook for Sri Lanka’s economy. The Sri Lanka rupee showed limited depreciation, bond yields held firm, and equity markets gained slightly — an alignment that reflects cautious optimism among investors as the nation continues its path toward sustained recovery.