ECONOMYNEXT – Sri Lanka rupee closed marginally up Friday at 198/199.00 against the one-week dollar, after opening stronger, while bond yields were flat/down dealers said.
The rupee last closed in the one-week forward market at 198.50/199.00 to the US dollar on Thursday.
Sri Lanka temporarily lifted a requirement to surrender 10 per cent of remittances and 12.5 per cent of exporter receipts to the central bank, reducing pressure on banks who were building up dollar positions to make payments, market participants said.
As banks sold down open dollar positions, liquidity improved yesterday.
A surrender requirement acts as a strong side convertibility undertaking that injects new liquidity to a pegged exchange rate arrangement.
However, Sri Lanka’s rupee is now under pressure from existing excess liquidity injected through debt monetization (printed money) requiring dollars sales (weak-side convertibility undertaking) to redeem the rupees.
In the secondary market bond yields remained unchanged on dull market trade, dealers said.
A bond maturing on 15.12.2022 closed at 5.80/90 per cent on Friday, down from 5.85/90 per cent on Thursday.
A bond maturing on 15.11.2023 closed at 6.20/35 per cent, down from 6.25/35 per cent on Thursday.
A bond maturing on 01.12.2024 closed at 6.60/70 per cent on Friday, down from 6.68/78 per cent on Thursday.
A bond maturing on 01.05.2025 closed at 6.70/90 per cent, up from 6.75/90 per cent.
A bond maturing on 15.02.2026 closed flat at 7.05/10 per cent on Friday.
A bond maturing on 15.08.2027 closed at 7.45/55 per cent, unchanged from 7.45/55 per cent on the previous day.
A bond maturing on 01.05.2029 closed at 8.00/30 per cent.
A bond maturing on 15.05.2030 closed at 8.15/40 per cent, up from 8.00/30 per cent. (Colombo/March19/2021)