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Sri Lanka rupee quoted slightly firmer at 199.50/200.50 levels in one-week forwards market

ECONOMYNEXT – Sri Lanka’s rupee quoted slightly firmer at 199.50/200.50 levels to the US dollar in one week forward market on Thursday after hitting a new low at 202/303 levels on Wednesday dealers said while the bond yields remained unchanged.

When the currency comes under pressure, spot trading usually stops and trading takes place in the short term forward market in the spot next (value three days) or for settlement in a week.

Deals were done around 202.50 intra-day in the on week market. Dollar liquidity was tight for smaller banks, dealers said.

Sri Lanka has placed surrender requirements for exporters and remittances. A dollar surrender is an intervention by the central bank against the exchange rate peg which already is weak adding new liquidity and taking dollars away from the market.

The rupee last closed in the one- week forward market at 202/303 to the US dollar on Wednesday and the spot next closed at 200.75 to the US dollar.

With the dollar yield higher than the rupee yield amid money printing, forward premiums have inverted. The spot/one-year swap premium was as much as 400 basis points negative, market participants said.

In the secondary market bond yields remained unchanged on dull market trade, dealers said.

A bond maturing on 15.12.2022 was quoted flat at 5.80/90 per cent on Thursday from the previous day’s close.

A bond maturing on 15.11.2023 was quoted flat at 6.25/35 per cent on Thursday from Wednesday’s close.

A bond maturing on 01.12.2024 was quoted at 6.60/70 per cent on Thursday, up from 6.55/65 per cent on Wednesday.

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A bond maturing on 01.05.2025 was quoted at 6.80/95 per cent, steady from 6.80/7.00 per cent.

A bond maturing on 15.02.2026 was quoted at 7.05/20 per cent, down from 7.10/20 per cent.

A bond maturing on 15.08.2027 was quoted at 7.50/70 per cent, steady from 7.50/60 per cent at the previous day’s close.

A bond maturing on 01.05.2029 was quoted at 8.10/30 per cent, up from 8.00/30 per cent at Wednesday.

A bond maturing on 15.05.2030 was quoted at 8.20/65 per cent, from 8.15/55 per cent. (Colombo/March18/2021)

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