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Sri Lanka rupee sees erratic trade, one week at 198.0, spot strengthens towards close

ECONOMYNEXT – Sri Lanka’s rupee traded as weak as 198.00 to the US dollar in one week forward but the spot traded from around 194.00 to 191.50 levels later in the day with state name sales, dealers said.

Banks were on average buying dollars from 190.18 rupees from telegraphic transfers and were selling at 197.21 to the US dollar, according to central bank data.

Sri Lanka’s stock market continues to be closed till April 27 amid curfews. It is not clear why Sri Lanka’s stock markets are closed.

But bond markets are open.

The rupee is under pressure due to excess liquidity. Large volumes of excess rupees printed triggers foreign exchange shortages in a pegged exchange rate regime.

With export and import volumes falling, the proportion of excess liquidity compared to forex volumes are now much higher than before, putting further pressure, analysts say.

Liquidity in the overnight money market was 129.45 billion rupees on Monday.

Banks deposited 130.13 billion rupees in central bank’s excess liquidity window.

In the secondary government securities market gilt yields were flat in moderate trade with high liquidity seen in 2024 maturities, dealers said.

A bond maturing on 15.12.2021 was quoted at 7.60/75 percent.

A 2-year bond maturing on 01.10.2022 was quoted at 8.15/20 percent up from 8.10/20 percent.

A bond maturing on 01.09.2023 was quoted at 8.60/65 percent, up from 8.55/65 percent.

A bond maturing on 15.09.2024 was quoted at 8.82/87 percent down from 8.83/8.88 percent on Tuesday.

A bond maturing on 15.10.2027 was quoted at 9.20/25 down from 9.18/20 percent 9.16/22 yesterday.
(Colombo/ Apr22/2020)

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