Sri Lanka rupee falls to new low, bond yields slightly higher
COLOMBO (EconomyNext) – Sri Lanka’s rupee fell to 134.20 to the US dollar Thursday, as the intervention rate was weakened by a state bank and bonds, edged up amid slightly amid foreign selling, dealers said.
Bond yields which rose in intra-day trade, fell back as more domestic buying came in, dealer said.
There was selling seen in 6-year bonds leading to about 5 basis point rise in shorter maturities but the longer end was largely unchanged.
Sri Lanka’s rupee is pressured from contradictory exchange and monetary policies of the Central Bank, which cut rates and poured liquidity into money markets even as budget deficits deteriorated and private credit also improved.
The central bank has been engaged in such tactics since it was set up in 1951, weakening the currency from 4.76 to the US dollar from 134.20 this week.
Analysts have earlier called for the central bank to be abolished and a currency board which cannot print money to manipulate interest rates to be re-established to protect the poor, the wage earners and savings of old people.
A summary of bond yield increases seen on Thursday are given below.
2-year bonds maturing on 15.05.2017 – 6.85/95 percent up from Wednesday’s 6.80/7.00
3-year bonds maturing on 01.06.2018 – 7.70/74 percent up from Wednesday’s 7.55/65
4-yuear bonds maturing on 15.09.19 – 8.02/07 percent up from Wednesday’s 8.04/06
5-year bonds maturing on 01.05.20 – 8.22/30 percent up from Wednesday’s 8.20/25
6-year bonds maturing on 01.08.2021 – 8.65/73 percent up from Wednesday’s 8.60/70
7-year bonds maturing on 01.07.22 – 8.70/80 percent up from Wednesday’s 8.70/75
8-year bonds maturing on 01.09.2023 – 8.91/94 percent up from Wednesday’s 8.90/95
9-year bonds maturing on 01.01.2024 – 8.94/9.00 percent unchanged from Wednesday’s 8.95/9.00
10-year bonds maturing on 15.03.25 – 9.01/03 percent up from Wednesday’s 9.00/10
15-year bonds maturing on 15.05.2040 – 9.20/40 percent up from Wednesday’s 9.20/40
20-year bonds maturing on 15.03.35 – 9.40/60 percent flat from Wednesday’s 9.40/60
30-year bond maturing on 01.03.2045 – 10.30/70 also unchanged.