Sri Lanka bond yields up, rupee tad weaker against the dollar

COLOMBO (EconomyNext) – Sri Lanka’s bond yields rose Thursday in the wake of higher yields at a Treasuries auction a day earlier and the spot US dollar was also allowed to weaken 10 cents to 132.90/133.20 levels dealers said.

Sri Lanka Treasuries yields rose for the second day running at the weekly auction and one year bills were quoted around 6.10/20 percent, Thursday.

Two-year bonds were quoted at 7.10/15 percent levels Thursday up from 7.05/7.10 percent a day earlier.

Three-year bonds rose to 7.27/30 percent from 7.20/23 percent a day earlier.

A 7-year bond rose to 7.83/87 percent from 7.77/82 percent dealers said.

The rupee was allowed to be quoted around 132.90/133.20 levels to the US dollar from 132.80/133.00 levels a day earlier.

Sri Lanka’s rupee has come under pressure from stronger credit growth and a revised budget in January which raised current spending has put further pressure on the credit system, which require higher interest rates to keep the economy and the exchange rate in balance, analysts say.

The central bank has been enagaging in unsterilized interventions to mop up excess liquidity but moral suasion is also being used against dealers.