Sri Lanka forward rupee extends gains on sovereign bond sale

COLOMBO (EconomyNext) – Sri Lanka’s rupee strengthened to 137.65/75 rupees to the US dollar in the three month forward market in late afternoon trade Thursday with expectations of inflows from a sovereign bond sale, dealers said.

The three month forward rupee fell to a record low of from 137.90/138.10 to the US dollar on Wednesday amid uncertainty and controls on spot market trading but gained in morning trade to 137/90/138.10 as news of a sovereign bond sale spread.

Authorities have placed restrictions on short term trading and there is no real spot foreign exchange market in the country, which has contributed to the dent the credibility of the country’s soft peg to the dollars, analysts say.

Sources familiar with the deal said the sovereign bond is expected to close Thursday after Western markets open and book building was gaining pace.

Sri Lanka is marketing 10-year bonds with a price guidance of 6.375 percent.

Sri Lanka was initially planning to go for a 1.5 billion US dollar bond in January but it was delayed.

Sri Lanka raised a billion US dollar 5-year bond in January 2014 for 6.0 percent and another 500 million US dollars in April 2014 for 5.125 percent.

The last 10-year bond was sold in 2012 for 5.8 percent.

International conditions are now tighter and the US Federal Reserve is expected to raise rates.





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