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Sri Lanka rupee weaker in erratic trade, bond yields down

ECONOMYNEXT – Sri Lanka’s rupee was quoted wide around 194.50/196.00 to the US dollar in the one week forward market while there were sporadic spot trades around 195.00 to the US dollar earlier in the day, dealers said, while bond yields were lower.

Sri Lanka’s rupee closed around 191.50/192.00 to the US dollar after some spot deals were seen on Friday.

Sri Lanka’s rupee trading has been erratic after excess liquidity shot up, and is now looming large compared to diminished two-way flows, with both imports and exports down.

The spot and one week rate has been erratic with large swings.

However any liquidity given as credit or spent by the government will put pressure on the rupee. In most countries, external pressure comes from printed money given as state worker salaries.

In extreme cases printed money given as state worker salaries trigger hyper-inflation despite collapses in domestic consumption, analysts say.

In the secondary government securities market gilt yields fell marginally in active trade with high liquidity seen in 2024 maturities, dealers said.

A bond maturing on 15.12.2021 was quoted at 7.60/75 percent, down from 7.75/90 percent.

A 2-year bond maturing on 01.10.2022 closed at 8.15/25 percent down from 8.20/35 percent.

A bond maturing on 01.09.2023 closed at 8.55/65 percent, down from 8.60/70 percent.

A bond maturing on 15.09.2024 closed at 8.85/88 percent down from 8.95/9.05 percent on Friday.

A bond maturing on 15.10.2027 closed at 9.20/22 down from 9.30/40 percent on week’s close. (Colombo/ Apr20/2020)