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Sri Lanka rupee gains to 190.50/191.50 to greenback amid LOLC hopes, bond flat

ECONOMYNEXT – Sri Lanka’s rupee gained to 190.50/191.50 levels to the US dollar in the spot market after opening weaker in the one month market, while sentiment was boosted by expectations of dollar inflow from LOLC group, dealers said, while bonds were flat.

The rupee traded had traded as weak as 195.50 levels to the US dollar in the one month market and a state bank that usually acts for the monetary authority started selling dollars to customers at around 193.80 levels, leading to dollar selling by other banks, dealer said.

Sri Lanka’s rupee was quoted around 194.50/195.50 to the US dollar in the one week forward market last Thursday.

The net open positions for forex of some banks had also been cut last week.

Sri Lanka goes through cycled of liquidity injections followed by currency falls, stopping car imports, cutting net open positions without any changes to the high unstable soft-peg, analysts say.

Sentiment was also boosted by expectations of a dollar inflow from Lanka Orix Leasing Company, dealers said.

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However the excess liquidity in money markets is still high and a float makes no sense andSoros-style swaps may generate liquidity put further pressure on the rupee analysts say.

In the secondary government securities market, yields remained flat in dull trade, while 2022, 2023 and 2024 maturities remained more liquid, dealers said.

A bond maturing on 15.12.2021 was quoted at an indicative rate of 8.20/40 percent on Wednesday.

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A 2-year bond maturing on 01.10.2022 was quoted at 8.50/60 percent, up from 8.45/55 percent at Thursday’s close.

A bond maturing on 01.09.2023 was quoted at 8.90/9.00 percent, up from 8.85/95 percent at the previous close.

A bond maturing on 15.09.2024 was quoted at 9.05/9.15 percent on Wednesday, climbing from 9.00/9.10 percent.

A bond maturing on 15.10.2027 was quoted at 9.35/45 percent up from 9.30/40 percent at Thursday’s close.

A bond maturing on 15.05.2030 was not quoted.

A bond maturing on 15.09.2034 was not quoted. It closed at 10.00/40 percent in its last close. (Colombo/ Apr15/2020)