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Sri Lanka rupee ends marginally strong, gilt yields gain

ECONOMYNEXT – Sri Lanka rupee closed firmer at 185.72/78 to US dollar in the spot market on Monday while bond yields were up and stocks gained, dealers said.

Rupee closed at 185.75/85 to the greenback on Thursday.

Analysts expect the rupee to trade between 185 to 190 to the US dollar this year, but it could weaken later.

Sri Lanka rupee fell close to 200 to the US dollars as money was printed in March but has since been allowed to appreciate to 185 to the US dollar. Amid suspected real effective exchange rate targeting the central bank is buying dollars at 185 instead of allowing it to appreciate it back to 182 to the US dollar.

Analysts said Sri Lanka’s economy could contract up to 4 percent in 2020 and the budget deficit could expand to as much as 11 percent gross domestic with import controls amplifying the impact of Coronavirus on revenues.

In equities, Colombo’s All Share Price Index gained 0.79 percent or 39.82 points to 5,105.12.

S&P SL20 of more liquid stocks up 0.75 percent or 16.28 points to 2,178.17.

Market turnover was 1 billion rupees while 136 stocks gained and 41 made losses.

Net foreign selling in the market was 89 million rupees.

There was only a single crossing in Sampath bank counter amounting to 24.3 million rupees.

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C T Holdings stocks contributed most to ASPI’s gain, climbing 12.00 rupees (8.39 percent) to trade at 155.00 rupees a share.

While Ceylon Cold Stores stocks gained 12.20 rupees to trade at 682.30 rupees a share and Melstacorp stocks climbed 90 cents to trade at 28.50 rupees a share.

In the secondary government securities market, gilt yields were up in moderate market trade, dealers said.

A 2-year bond maturing on 15.12.2022 closed at 5.68/73 percent on Monday, up from 5.55/62 percent at Friday’s close.

A bond maturing on 15.01.2023 closed at 5.70/77 percent climbing from 5.58/65 percent at Friday’s close.

A bond maturing on 15.09.2024 closed at 6.25/35 percent edging up from Friday’s closing at 6.17/23 percent.

A bond maturing on 01.05.2025 closed at 6.48/58 percent on Monday, edging up from 6.38/45 percent at last week’s closing.

A bond maturing on 01.02.2026 closed at 6.60/70 percent, up from 6.55/60 from the previous close.

A bond maturing on 15.10.2027 closed at 6.85/7.05 percent, up 6.70/80 percent from Friday’s end.

A 10-year bond maturing on 15.05.2030 closed at 7.30/38 percent, gaining from 7.05.10 percent on Friday’s closing.
(Colombo/July27/2020)

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