Currency pressures and rising bond yields highlight market unease, even as stock indices open strong—signaling a complex economic environment shaped by inflation risks and shifting expectations.
Sri Lanka’s rupee opened slightly weaker on Friday, trading at 300.50/90 against the US dollar in the spot market, compared to Thursday’s close of 300.55/75, according to dealers. While the change was modest, the movement underscores continuing pressure on the currency amid evolving macroeconomic signals.
At the same time, bond yields—a critical indicator of investor sentiment and inflation expectations—showed a general upward trend. The yield on the bond maturing on December 15, 2026 was quoted at 8.10/20 percent, a marginal rise from the previous 8.08/21 percent. The 2027 bond rose slightly as well, quoted at 8.55/70 percent compared to 8.55/62 percent the previous day. The 2028 bond stood at 9.02/05 percent, showing no immediate change from earlier levels.
Interestingly, the bond maturing in December 2029 showed a slight dip, quoted at 9.60/70 percent, easing from 9.62/70 percent. However, the longer-dated 2032 bond climbed to 10.40/50 percent, from its earlier position of 10.40/47 percent. The overall uptick in bond yields suggests cautious investor sentiment amid uncertainty over interest rate directions, inflation trajectory, and government borrowing needs.
Despite these movements in the currency and bond markets, equities presented a more optimistic picture. The Colombo Stock Exchange opened on a strong note, with the All Share Price Index (ASPI) gaining 0.96 percent to reach 16,979 points. The more liquid S&P SL20 index also rose by 1.21 percent, closing at 5,079 points.
This mixed market landscape—where rising bond yields reflect growing caution even as stocks rally—highlights the delicate balancing act facing policymakers. With external pressures such as global energy costs and inflationary risks looming, Sri Lanka’s financial markets continue to navigate volatility, with currency stability and investor confidence at the forefront of economic concerns.