Sri Lanka rupee ends weaker, bond yield lower

ECONOMYNEXT – Sri Lanka’s rupee closed weaker 180.95/181.10 to the US dollar in the spot market on Monday while bond yields were slightly down dealers said.

Rupee closed at 180.65/75 against Friday.

Sri Lanka’s central bank has announced a auction to buy 12 billion rupees in 2 year bonds to inject longer term money and manipulate rates deeper in the yield curve.

The manipulation of the longer end of the yield also encourages foreign investors in bonds to sell out, analysts say. Similar effects were seen during the balance of payments crisis of 2015, analysts say.

The central bank has sold down some it bills in an operation twist style strategy, which long term watchers of central bank policy errors have called to be outlawed.

In the secondary bond market, bond yields eased in active market trade, dealers said.

A bond maturing on 15.12.2021 closed at 8.62/72 percent on Monday down from 8.68/73 percent on Friday.

A bond maturing 15.07.2023 closed at 9.63/70 percent Monday from 9.65/70 percent Friday.

A bond maturing on 15.09.2024 closed at 10.5/10 percent down from 10.10/15 percent.

A 15-year bond maturing on 15.09.2034 closed at 10.69/72 percent around the same levels as Friday’s 10.68/72 percent. (Colombo/Oct14/2019)