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Saturday October 23rd, 2021
Bonds & Forex

Sri Lanka rupee weakens to 227/228.50 to dollar in kerb market, bond yields up

ECONOMYNEXT – Sri Lanka’s rupee had weakened to around 227.00/228.50 in the kerb up from 226.00 levels at the beginning of the week, with import dollar rate also falling to around 211 to 218 to the US dollar, market participants said.

The kerb market rate for notes was around 223.50 at the beginning of the month, but has been creeping up over the past few days, market participants said.

Banks are also giving notes for travellers at higher rates.

Bank are struggling to find dollars to match the liquidity created from bond auctions with the central bank no longer providing dollars from its reserves for trade transactions.

Banks officially started announcing rates above a 203 to the US dollar moral suasion rate observed in the breach.

Foreign banks have somehow found dollars for essential imports including for state enterprises, market sources said.

Sri Lanka is facing foreign exchange shortages as money is printed to keep Treasuries yields down.

Undermining multiple price bonds auctions started with the so-called Stage III model auctions during the last administration and has led to whole sale monetization in 2020 and 2021, analysts say.

The central bank on Wednesday denied claims that it had allowed the rupee to be devalued.

The central bank’s indicative spot rate was still listed as 199.9000 on August 18, down from 199.9217 on August 17, while the buying rate for telegraphic transfers were listed 198.3183 and selling rate was at 202.8977 on Wednesday, though bank are quoting 211 or above.

Bond yields rose marginally.

Bonds maturing on 15/12/2022 quoted at 5.75/85percent on Wednesday up from 5.70/80per cent on
Tuesday.

Bonds maturing on 15.11.2023 was quoted at 6.35/45 per cent on Wednesday up from 6.35/40 per cent.

Bonds maturing on 01.12.2024 was quoted at 7.15/25percent on Wednesday up from 7.05/15per cent on Tuesday.

A bond maturing on 01/02/2026 was quoted at 7.45/65 percent on Wednesday up from 7.40/60 per
cent on Tuesday.

A bond maturing on 15.01.2026 was quoted at 7.45/65 per cent on Wednesdayup from 7.40/60 per centon Tuesday.

A bond maturing on 15/10/2025 was quoted at 7.25/45 percent onWednesday, steady from 7.25/35 percent on Tuesday. (Colombo/Aug 18/2021)

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