Sri Lanka rupee strengthens against dollar as bond yields hold steady

The rupee firmed further in Tuesday's trading, settling at 329.40/50 to the dollar in spot market transactions, continuing a recent upward trajectory for the local currency.

The strength in the rupee reflects ongoing stabilisation efforts in Sri Lanka's foreign exchange market, which has faced significant pressures in recent times. The currency's appreciation comes as the central bank pursues measures to support the local unit and rebuild reserves.

In the fixed income market, government bond yields remained largely unchanged, with investors maintaining their current positioning across the yield curve. The steadiness in bond valuations suggests market participants are adopting a cautious stance amid broader economic developments.

Market participants said the rupee's continued strength was positive for inflation management and external sector stability. However, traders cautioned that sustained appreciation would depend on maintaining adequate foreign exchange inflows and continued policy discipline.

The currency's performance will remain closely watched as authorities pursue their broader economic stabilisation agenda in the coming weeks.