Sri Lanka rupee flat trading conditions prevailed in domestic markets as the currency held steady against the US dollar, while government bond yields showed minimal movement, reflecting cautious investor sentiment amid recent exchange rate pressures.
Sri Lanka rupee flat while bond yields and equities remain stable
The Sri Lankan rupee remained broadly unchanged in spot market trading on Tuesday, signalling a pause in recent currency weakness as domestic financial markets displayed relative stability. Dealers quoted the rupee at 309.55/60 to the US dollar, marginally weaker than the previous session’s 309.50/60 level, indicating limited volatility despite depreciation pressures observed in recent weeks.
Market participants noted that subdued trading activity and balanced dollar demand helped keep the currency range-bound. While external pressures and import-related demand have weighed on the rupee in recent sessions, the absence of sharp capital outflows or sudden shifts in liquidity contributed to the stable outcome.
Alongside currency movements, government bond yields were largely steady, suggesting that expectations around interest rates and inflation remain anchored for now. The benchmark bond maturing on December 15, 2028, was quoted at 9.25/30 percent, unchanged from previous levels, reflecting consistent demand for medium-term securities.
Yields on longer-dated instruments also showed limited movement. The bond maturing on December 15, 2029, traded at 9.67/79 percent, while the March 15, 2031 maturity was quoted at 9.95/10.00 percent. These levels indicate a relatively stable yield curve, with investors maintaining positions amid ongoing assessments of fiscal and monetary conditions.
Some marginal easing was observed in selected longer tenors. The December 15, 2032 bond was quoted at 10.30/35 percent, slightly lower than the previous session’s 10.32/35 percent. Similarly, the June 1, 2033 maturity edged down to 10.65/70 percent from 10.65/78 percent, while the June 15, 2035 bond was quoted at 10.95/11.00 percent, marginally below earlier levels.
Market analysts noted that the modest declines in longer-term yields suggest cautious optimism regarding medium-term stability, even as investors remain alert to risks stemming from currency movements, fiscal funding needs, and global interest rate trends. Overall, the bond market reflected a wait-and-see approach rather than a decisive shift in sentiment.
In the foreign exchange retail market, telegraphic transfer rates indicated stable pricing across major currencies. The US dollar was quoted at 306.10 buying and 313.10 selling. The British pound traded at 417.71 buying and 429.03 selling, while the euro was quoted at 361.29 buying and 372.68 selling, reflecting prevailing international exchange trends.
Equity markets also recorded modest gains, reinforcing the theme of stability across asset classes. The All Share Price Index on the Colombo Stock Exchange rose 0.09 percent, gaining 20.86 points to close at 23,973. Meanwhile, the S&P SL20 index advanced 0.10 percent, or 6.93 points, to finish at 6,670.
Market participants attributed the mild uptick in equities to selective buying and steady investor participation rather than broad-based momentum. Trading volumes remained moderate, suggesting that investors are positioning cautiously ahead of upcoming domestic funding operations and global market developments.
Attention is now turning to the government’s near-term borrowing programme. Treasury authorities are scheduled to issue 125 billion rupees in Treasury bills through an auction on Wednesday, followed by an issuance of 205 billion rupees in Treasury bonds on Thursday. These auctions are expected to provide further insight into liquidity conditions and investor appetite across maturities.
Analysts indicated that the outcome of these auctions could influence short-term yield movements and potentially affect currency sentiment, particularly if demand signals diverge from market expectations. For now, however, the Sri Lanka rupee flat trend and stable bond yields suggest that financial markets are absorbing current pressures without significant disruption.