Sri Lanka defends currency at 133.80, bond markets active
COLOMBO (EconomyNext) – Sri Lanka continued to defend the rupee at 133.80 to the US dollar in the spot market but there were restrictions on forward trading amid sales of bonds by foreign investors, dealers said.
In the forward market there is a ceiling of 133.95 rupee to the greenback by moral suasion for one week, 133.40 for one month and 135.50 on the three months, dealers said.
A state bank which was selling dollars liberally earlier in the week for trade backed transactions was now giving forex for only part of the bid, dealers said.
Excess liquidity which was not mopped up by domestic operations is now falling rapidly with rupees coming in for redemption in forex markets.
Excess liquidity dropped to 86 billion rupees Thursday from 97 billion rupees on June 01, official data showed.
Increased foreign investor selling in rupee bonds was being helped by secondary market liquidity coming from Employees Provident Fund, which among others was buying 7 to 10 year bonds, helped bring yields down, dealers said.
The 6-year bond went up to 8.46/48 percent and closed at 8.38/42 percent.
The 7-year bond moved up to 8.56/60 percent and then closed at 8.52/65 percent, 8-years to 8.80/82 percent and closed at 8.73/75 percent, 9-years moved up to 8.93/95 percent and closed at 8.84/87 percent.
Ten year bonds which rose to 8.98/9.00 percent, dropped to 8.85 levels and closed at 8.88/92 percent, dealers said.
The 30-year bond was quoted 10.20/50 percent.