Sri Lanka rupee trading weaker, bond yields steady

On Wednesday, the Sri Lankan rupee was quoted weaker at 310.10/20 against the US dollar in the spot market, compared to the previous day’s rate of 310.00/10, according to market dealers. Meanwhile, bond yields remained largely stable at the market’s opening.

Analysts have cautioned the central bank against depreciating the rupee by excessively purchasing dollars beyond its deflationary policy. Such actions could lead to increased energy and food costs, even amidst a relatively mild US monetary policy environment. When the central bank purchases dollars at a rate of 310 to the US dollar, it signals the market to further devalue the rupee, experts suggest.

Unlike other buyers, such as the Treasury or standard importers, the central bank’s dollar purchases introduce new money into the economy, maintaining the rupee’s depreciation due to significant one-sided transactions. To prevent these new rupees from affecting the foreign exchange markets, it is necessary to neutralize or sterilize them through deflationary measures.

Historically, the central bank has depreciated the rupee from 4.77 to 310 to the US dollar, often avoiding accountability, particularly since 1980.

In terms of telegraphic transfer rates, the dollar was quoted at 306.5000 for buying and 313.5000 for selling. The British pound was at 413.1563 for buying and 424.5181 for selling, while the euro stood at 356.3883 for buying and 367.7515 for selling.

Bond market data showed that a bond maturing on December 15, 2028, was quoted at 9.25/30 percent, a slight increase from 9.20/30 percent. A bond maturing on December 15, 2029, was quoted at 9.70/72 percent, down marginally from 9.70/73 percent. Similarly, a bond maturing on July 1, 2030, was at 9.75/78 percent, a decrease from 9.77/80 percent. A bond maturing on October 1, 2032, was quoted at 10.32/40 percent, slightly up from 10.30/40 percent, and a bond maturing on November 1, 2033, was quoted at 10.52/60 percent.

Furthermore, an auction for 100,000 million rupees in Treasury bills was underway. (Colombo/Jan7/2026)