ECONOMYNEXT – Sri Lanka’s rupee was quoted weaker on January 01, 2021 in late trading dealers said, after strengthening on December 31 amid intervention and moral suasion.
The rupee was quoted around 186.50/188.50 to the US dollar in the spot next market around opening but activity dried up amid partial holiday of most private firms on January 01, market participants said.
In late afternoon trade, one month forwards were quoted around 189.50 to the US dollar with market activity tailing off.
Given inverted forward rates due to rupee yields, the implied spot should be even higher, analysts say though no trades are taking place to establish a price.
Sri Lanka’s central bank has said that it would act aggressively to keep the rupee peg around 185 to the US dollar.
While it is possible to maintain a peg at any level, including 185, there has to be monetary policy to support a any peg in the form on a floating overnight rate or at least a wide policy corridor to block large injections that will result in unsustainable credit and forex reserve losses, analysts say.
On Thursday deals were done around 185/186 to the US dollar in the spot market amid intervention.
In the secondary securities market, bond yields remained unchanged in dull market trade, dealers said.
A 2-year bond maturing on 15.12.2022 was quoted at 5.70/75 per cent on Friday, up from 5.65/70 per cent.
A bond maturing on 15.01.2023 closed at 5.65/70 per cent on Friday, down from 5.68/74 percent from last closing.
A bond maturing on 15.09.2024 closed at 6.35/42 down from 6.42/47 per cent.
A bond maturing on 01.05.2025 closed at 6.50/60 per cent on Friday, unchanged.
A bond maturing on 01.02.2026 closed at 6.68/75 steady from 6.70/75 from the previous day’s end.
A bond maturing on 15.08.2027 closed flat at 7.15/20 per cent.
A bond maturing on 01.07.2028 closed at 7.20/35 up from 7.23/30 per cent from the previous day’s end.
A 10-year bond maturing on 15.05.2030 closed at 7.70/90 up from 7.75/85 per cent. (Colombo/Jan01/2021)