Sri Lanka’s rupee was quoted at 331.55/65 to the US dollar in the spot market on Monday, weaker than Friday’s 331.25/35, while government bond yields were quoted slightly higher, EconomyNext reported, citing dealers.
The same filing carried a line that matters more than the day’s quotes: Rs. 100 billion of Treasury bills will be offered at auction on Wednesday, 21 October.
The offer has risen Rs 10bn a week into falling demand
That figure is the third consecutive weekly increase in the amount of bills the Public Debt Management Office puts to market — and it follows an auction that the market did not fill.
| Auction | Offered | Sold at auction | Fill |
|---|---|---|---|
| 7 October | Rs. 80bn | Rs. 80bn | 100% |
| 14 October | Rs. 90bn | Rs. 66.12bn | 73.5% |
| 21 October | Rs. 100bn | — | — |
On 7 October the debt office sold the entire Rs. 80 billion offered. A week later it raised the offer to Rs. 90 billion and sold Rs. 66.12 billion — Rs. 23.88 billion short. A follow-on tap added only Rs. 7.206 billion at auction rates, leaving that week’s issuance Rs. 16.67 billion below target.
Wednesday’s offer is therefore 25% larger than the last auction the market filled, and Rs. 10 billion larger than one it could not. Nothing in the filing explains the increase.
Yields rose across the curve, with one exception
The dealer quotes show yields up at every maturity but one — the 15.10.2030 bond, which was quoted flat.
| Maturity | Monday | Friday |
|---|---|---|
| 01.08.2030 | 11.42/50% | 11.40/50% |
| 15.10.2030 | 11.50/55% | 11.50/55% (flat) |
| 01.02.2031 | 11.60/65% | 11.55/65% |
| 01.02.2031 | 11.75/78% | 11.70/80% |
| 15.01.2033 | 12.00/08% | 11.95/12.05% |
| 15.10.2034 | 12.30/35% | 12.25/35% |
Two notes on that table. EconomyNext lists 01.02.2031 twice, at two different quotes — the second line is likely a different maturity carrying a mislabelled date, and is reproduced here as published rather than silently corrected or dropped.
Second, the three maturities this desk recorded on Friday — 01.08.2030 at 11.40/50, 15.10.2030 at 11.50/55 and 01.02.2031 at 11.55/65 — match Monday’s stated prior quotes exactly. The day-on-day comparison checks out against the record.
The currency move is accelerating
The rupee has weakened in each of the last three sessions, and the pace has picked up:
- Thursday 15 October: 331.15/25
- Friday 16 October: 331.25/35 — 10 cents weaker
- Monday 19 October: 331.55/65 — 30 cents weaker
Monday’s move was three times Friday’s. The currency has fallen 6.4% so far this year through 16 October.
That matters against what this desk reported on Sunday. Foreign investors bought rupee bonds for a third straight week to 16 October, but only a net Rs. 364 million — a smaller figure than either of the two preceding weeks, which analysts attributed to downward pressure on the rupee. That pressure intensified on Monday, the first session after the week those figures cover.
Telegraphic transfer rates were quoted at 326.80 buying and 335.80 selling for the dollar — a nine-rupee band straddling the spot mid-rate of 331.60, or about 2.7% of the currency’s value. The euro was 364.41/378.19 and the pound 434.57/448.67.
A dollar bond is being prepared for the domestic market
Separately, the Public Debt Management Office has held a pre-bid meeting ahead of issuing a Domestic Dollar Bond (DDB) 2026, a US dollar-denominated instrument to be sold in the domestic market, EconomyNext reported.
The ministry’s own press release gives detail the wire account does not. The meeting was convened on 16 October from 9.30 a.m. to 10.30 a.m., and all 15 designated agents and the paying agent attended, according to the Public Debt Management Office. The designated agents comprise primary dealers and licensed commercial banks.
Officers from the Central Bank’s Foreign Exchange Department and from the Treasury’s Fiscal Policy and Treasury Operations departments also attended. The release says the meeting was held to clarify operational and regulatory aspects of the issue, and that the bond forms part of efforts to diversify government funding sources and deepen the domestic government securities market.
A government borrowing in dollars domestically, in the same week it asks the market to absorb a record recent bill offer, sits alongside a currency that has weakened for three sessions. No filing connects the three, and none is asserted here.
Not reported: neither EconomyNext nor the Ministry of Finance release states the size, tenor, coupon, issue date or settlement date of the Domestic Dollar Bond, nor which 15 institutions are the designated agents. Neither explains why the weekly bill offer has been raised to Rs. 100 billion after the last auction fell short. The filing gives no bid-to-cover data for Wednesday’s auction, which has not yet been held. No other verified newsroom had filed on Monday’s rupee and bond quotes at the time of writing — daily dealer-level forex and bond reporting in Sri Lanka is largely confined to EconomyNext.
