Sri Lanka rupee closes around 196/199 to dollar in spot next

ECONOMYNEXT – Sri Lanka’s rupee closed around 196.00/199.00 to the US dollar in the spot next markets Monday after moving in intra-day trade, while bond yields remained unchanged ahead of a 75 billion rupees bond auction on Tuesday, dealers said.

In late afternoon trade spot next bids were seen around 199.25 with no offers and spot trades were seen around 196.00/196.50 to the US dollar, during the day, weaker from Friday’s 195.50 levels, market participants sad.

One month quotes were also seen around 197.50/199.50 to the dollar, dealers said.

Rupee last closed around 197/200 in the spot-next market on Friday against the greenback with deals done around 198 levels, market participants said.

The central bank’s indicative spot rate was 196.8017 on January 25, down from 196.4250 on January 22, while the buying rate for Telegraphic transfers was 194.3125 and the selling rate 199.1875 on Monday morning.

Sri Lanka’s rupee has come under pressure from unprecedented excess liquidity, and domestic rupee rates are now lower than dollar yields, inverting forward premiums, which is discouraging exporters from selling dollars, market participants said.

Excess liquidity in money markets dropped to 117.5 billion rupees on Tuesday, from 121.4 billion rupees Friday. Excess liquidity has dropped in unsterilized dollar sales and also Central Bank securities sales, which tends to support the rupee, though overnight rates had not moved.

Though private credit is still weak, excess liquidity is around the levels seen in 2015, when cash was injected to keep rates near the floor policy corridor and trigger a currency collapse.

Exporters and other could also borrow printed money at low rates and hold dollars instead of selling forward.

Indicative US dollar exchange rates were 196.8017 on Monday, up from 196.4250 at Friday’s close.

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In bond markets, gilt yields are flat in dull market trade ahead the bond auction, dealers said amid a drop in excess liquidity.

Though Sri Lanka’s markets usually have a spot US dollar at

Sri Lanka’s debt office is offering 75 billion rupees bonds to be sold in auction held tomorrow.

A 2-year bond maturing on 15.12.2022 closed flat at 5.40/47 per cent on Monday from Friday.

A bond maturing on 15.01.2023 closed at 5.45/50 per cent on Monday, up from 5.42/50 per cent at the last closing.

A bond maturing on 15.09.2024 closed unchanged at 6.25/30 per cent.

A bond maturing on 01.05.2025 closed at 6.40/50 per cent, unchanged from Friday.

A bond maturing on 01.02.2026 closed at 6.65/75 per cent from the last closing.

A bond maturing on 15.08.2027 closed unchanged at 7.05/20 per cent from the last closing.

A 10-year bond maturing on 15.05.2030 closed flat at 7.55/75 per cent from Friday. (Colombo/January 25/2021)

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