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Sri Lanka rupee opens steady after gain, bond yields up

ECONOMYNEXT – Sri Lanka’s rupee was quoted at 176.20/30 Thursday after strengthening on Wednesday, but bond yields which fell after a mid-week bill auction, moved up, dealers said.

The rupee strengthened to 176.20/35 on Wednesday from 177.40/55 a day earlier.

In international markets, Turkey stopped its one week cash auctions in a bid to reduce speculation against the lira after a sharp drop in forex reserves. Swap rates soared amid speculation that they were also discouraged. Turkey’s central bank collects reserves and operates a soft-peg which is prone to instability.

Sri Lanka’s rupee also fell in the third quarter of 2018, partly helped by Soros-swaps with the central bank itself creating money. Pegged central banks discourage swaps to foreingers with banks because banks can borrow new money from central bank windows to re-finance the swaps and pressure the currency.

At a bills auction held on Wednesday, 12-month bills fell 12 basis points, driving longer term bond yields lower by close of trading.

Twelve-month bills were quoted at 10.25/35 percent Thursday in mid-morning trade, unchanged from yesterday.

But onbond yields picked up dealers said. On April 02, a 40 billion rupee bond auction is to be held, which was suddenly brought forward by a week.

A bond maturing on 01.08.2021 were quoted to 10.57/65 percent marginally up from yesterday’s closed of 10.55/60 percent, dealers said.
A bond maturing on 15.07.2023 were quoted at 10.90/11.00 up from yesterday’s 10.85/90 percent.
A 5-year bond maturing on 15.03.2024 was quoted at 11.00/05 percent up from 10.98/02 percent on Wednesday.
A bond maturing on 01.08.2026 was quoted at 11.10/20 percnet up from 11.05/20 percent yesterday.
A bond maturing on 15.06.2027 was quoted at 11.33/38 percent, from yesterday’s 11.30/35 percent.
A bond maturing on 01.09.2028 were quoted at 11.35/45 percent wide from yesterday’s close of 11.30/38 percent.
A bond maturing on 01.05.2029 was quoted at 11.41/48 percent up from yesterday’s 11.38/42 percent.

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