The Sri Lanka rupee weakened slightly against the US dollar on Thursday, reflecting mild market pressure, while government bond yields held steady across key maturities, market dealers reported.
Sri Lanka rupee slips against the dollar as bond yields remain broadly steady
The Sri Lanka rupee opened trading weaker on Thursday, quoted at 303.58/63 per US dollar, compared with the previous day’s close of 303.40/50, according to market dealers. The depreciation, though marginal, indicates continued market sensitivity to global currency movements and local demand for dollars in import settlements.
Bond yields remained broadly unchanged across several maturities, suggesting a balanced investor outlook amid expectations of gradual stabilization in the domestic financial market. Dealers said that the government securities market showed limited movement, with investors maintaining a cautious stance as they await clarity on future monetary policy directions.
A sovereign bond maturing on 15 December 2026 traded flat at 8.30/35 percent, signaling stable investor sentiment toward shorter-term debt. Similarly, the 15 September 2027 bond recorded a mild uptick to 8.80/85 percent, slightly higher than the previous day’s 8.80/83 percent. This minor increase reflected cautious repositioning by institutional investors following recent currency fluctuations.
Further along the yield curve, a bond maturing on 1 July 2028 remained steady at 9.25/30 percent, while the 15 December 2029 bond edged up to 9.70/75 percent, compared to 9.67/73 percent earlier. Market analysts interpret this as an indication that investors are pricing in moderate inflation expectations and a slower pace of policy easing by the Central Bank.
Longer-tenor securities continued to trade with minimal changes. The 15 December 2032 bond held steady at 10.50/65 percent, while the 1 November 2033 bond saw a slight increase to 10.70/75 percent, up from 10.67/73 percent on Wednesday. These marginal shifts highlight the current stability in Sri Lanka’s fixed-income market despite the rupee’s weakening trend.
Meanwhile, foreign exchange rates across major currencies reflected the rupee’s limited movement. The telegraphic transfer (TT) rate for the US dollar was quoted at 299.85 for buying and 306.85 for selling. The British pound traded at 398.92 buying and 410.28 selling, while the euro stood at 345.48 buying and 356.84 selling. Dealers noted that cross-currency volatility remains subdued, aligning with steady global markets.
At the Colombo Stock Exchange (CSE), trading opened positively, suggesting renewed investor optimism following recent economic updates. The All Share Price Index (ASPI) rose 0.48 percent, or 109.10 points, reaching 22,900, while the S&P SL20 index climbed 0.40 percent, or 24.80 points, to 6,301. Analysts attributed this upward momentum to continued foreign inflows and selective buying in blue-chip stocks.
Economists suggest that while the rupee’s marginal weakness reflects ongoing adjustments to foreign exchange liquidity, the stability in bond yields points to increasing investor confidence in Sri Lanka’s near-term fiscal direction. The Central Bank’s efforts to manage inflation and maintain adequate reserves have contributed to a relatively stable macroeconomic environment.
Market participants are closely monitoring global developments, especially in the US Treasury market and oil prices, which could influence domestic currency and bond dynamics. A stable outlook for inflation and steady policy signals from the monetary authority could help sustain investor confidence and keep yields anchored.
Looking ahead, traders expect the rupee to trade within a narrow band, supported by foreign remittance inflows and anticipated seasonal tourism receipts. However, continued import demand and dollar repayments may exert periodic downward pressure. The Central Bank’s measured interventions are likely to remain a key stabilizing factor in the coming weeks.
Overall, the Sri Lanka rupee’s mild weakness paired with steady bond yields underscores a phase of consolidation in the financial markets, suggesting cautious optimism among both local and foreign investors.