Sri Lankan rupee strengthens, 3-year bond yields rise sharply

CEAT Kelani Holdings Managing Director Ravi Dadlani (right) and Lanka Ashok Leyland CEO Umesh Gautham exchange the OEM agreement

August 29, 2006 (LBO) – Sri Lankan rupee firmed up against the U.S. dollar Tuesday, while share prices dipped as investors hunted for market leads, brokers said. Colombo’s benchmark All Share Price Index shed 2.81 points or 0.13 percent to 2,141.98, while the liquid Milanka Price Index, which tracks 25 stocks, slipped 10.40 points or 0.38 percent.

Volume totaled 13.97 million shares worth 522.80 million rupees. Foreign buying accounted for 411.86 million rupees over sales of 410.39 million rupees according to Colombo Stock Exchange figures.

Foreign interest in NDB Bank helped the counter gain 1.1 percent to 156.00 rupees on volumes of 2.7 million shares. Brokers said the deal was a foreign-to-foreign transfer in two blocks of 100,000 and 2.6 million shares both priced at 155.00 rupee per share.

Elsewhere, Indian fuel retailer Lanka IOC slipped 2.0 percent to 24.25 rupees, while market mover Dialog Telekom shed 1.3 percent to 19.75 rupees.

In the foreign exchange market, the rupee continued strengthen, closing firmer at 102.82 from Monday’s close of 103.25.

The greenback traded at a wide range between 102.76 and 102.93, as foreign banks sold dollars and exporters converted their foreign earnings.

Since last week, heavy dollar sales by foreign banks shored the rupee up 1-percent. Traders say the currency is artificially kept at that level, as the absence of major import bills in the next two weeks and few buyers for dollars, is keeping the currency strong.

Call rates at brokers markets were steady at 10.875 percent, while the liquidity surplus in the money market rose to 1.97 billion rupees.

Yields in secondary market bond trading perked up slightly following today’s treasury bond auction, which saw 3-year yields rise sharply to 11.16 percent from 11.05 percent. Bond traders took a cue from auction rates and 3-year yields climbed to 11.18 percent and four-year treasuries to 11.32 percent.

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