Sri Lanka rupee flat at the market open on Wednesday as bond yields remained broadly steady, reflecting cautious sentiment following recent currency depreciation and stable conditions across government securities and equity markets.
Sri Lanka rupee flat in early trade while government bond yields stabilise
The Sri Lanka rupee flat opening on Wednesday signalled a pause in recent currency volatility, with the local unit trading at 309.60/70 against the US dollar in the spot market. This marked a marginal change from the previous day’s close of 309.65/75, according to market dealers, even as the rupee has weakened over recent weeks.
Currency traders noted that the rupee’s recent depreciation comes despite record current account surpluses and improving fiscal indicators, including narrowing budget deficits. Market participants attribute the pressure largely to central bank liquidity operations, where selective restrictions on convertibility for private importers followed dollar purchases that injected liquidity into the financial system.
Bond markets showed limited movement, with yields broadly steady across maturities. The government bond maturing on December 15, 2028 was quoted at 9.15 to 9.25 percent, easing slightly from the previous range of 9.20 to 9.30 percent. The September 15, 2029 maturity was quoted between 9.50 and 9.70 percent, while the December 15, 2029 bond traded around 9.65 to 9.75 percent.
Longer-dated securities also reflected stable conditions. The March 15, 2031 bond was quoted at 9.95 to 10.05 percent, and the December 15, 2032 maturity traded between 10.30 and 10.45 percent. The November 1, 2033 bond saw a slight easing, quoted at 10.45 to 10.50 percent, marginally down from the previous close.
Analysts say the combination of a Sri Lanka rupee flat opening and steady bond yields suggests cautious equilibrium in financial markets, as investors assess macroeconomic signals and policy direction. While external sector fundamentals have improved, liquidity conditions and exchange controls continue to influence short-term currency movements.
Foreign exchange rates published by commercial banks reflected similar stability. Telegraphic transfer buying and selling rates for the US dollar were quoted at 306.00 and 313.00 respectively. The British pound traded at 413.09 buying and 424.46 selling, while the euro was quoted at 358.99 buying and 370.36 selling.
Equity markets mirrored the steady tone, with modest gains recorded on the Colombo Stock Exchange. The All Share Price Index rose 0.10 percent, adding 22.23 points to close at 21,949. Meanwhile, the S&P SL20 index gained 0.21 percent, or 12.91 points, to settle at 6,024.
Market participants note that the combination of a Sri Lanka rupee flat opening, stable bond yields, and mildly positive equity performance points to restrained investor sentiment rather than strong directional conviction. Investors continue to monitor monetary policy operations, external inflows, and exchange rate management strategies for clearer signals in the weeks ahead.