Rupee firms to 334.20/25 as bond yields fall across the curve

Sri Lanka’s rupee closed stronger at 334.20/25 to the US dollar in the spot market on Wednesday, firming from 334.50/60 a day earlier, dealers said.

Government bond yields fell across every tenor quoted, extending a decline that has run through much of the past week.

Yields lower along the curve

A bond maturing on 15 September 2027 closed at 9.95/10.05 percent, down from 10.00/20 percent — bringing the short end of the curve back below 10 percent on the bid side.

Further out, the 15 October 2028 maturity closed at 10.30/40 percent from 10.45/50, and the 15 December 2029 bond at 10.60/70 percent from 10.80/90.

The 1 August 2030 bond closed at 10.90/11.00 percent from 11.10/17, while the 15 October 2030 maturity ended at 10.95/11.02 percent from 11.15/20. The 1 February 2031 bond closed at 10.95/11.05 percent, down from 11.25/28.

At the long end, the 15 January 2033 bond closed at 11.55/65 percent from 11.70/85, the 15 October 2034 maturity at 11.80/90 percent from 12.00/05, the 15 August 2036 bond at 12.25/35 percent from 12.45/50, and the 1 July 2037 maturity at 12.30/40 percent from 12.45/55.

The declines were broad, with the sharpest moves in the 2030 and 2031 maturities, where bid yields fell by 20 to 30 basis points.

A note on the source figures

EconomyNext’s Wednesday report carries the closing rate of 334.20/25 in its headline and in its Bonds and Forex index, but the opening line of the article repeats the previous session’s rate of 334.50/60 and refers to Tuesday.

The 334.20/25 figure is Wednesday’s close. EconomyNext’s separate report on Tuesday’s session gives 334.50/60 as that day’s closing rate, with bond yields steady rather than falling.