Sri Lanka’s rupee closed at 310.00/10 to the US dollar in the spot market Tuesday, weaker from 309.75/85 the previous day, dealers said, while bond yields edged up on the short end and remained steady across the rest of the yield curve.

Analysts have warned the central bank not to push the rupee down by over-purchasing dollars above its deflationary policy which will eventually push up energy and food costs, even when US monetary policy is relatively benign.

When the central bank buys dollars at 310 to the US the market is signalled to push the rupee down, analysts say.

Unlike other buyers like the Treasury or ordinary importers, central bank purchases create new money and the rupee stays down from heavily one sided purchases.

To stop the new rupees from boomeranging on the forex markets, the rupee have to be extinguished, sterilized through deflationary policy.

The central bank has busted the rupee from 4.77 to 310 to the US dollar escaping accountability, especially after 1980.

A bond maturing on 15.12.2026 closed flat at 8.50/60 percent.

A bond maturing on 15.09.2027 closed at 9.00/05 percent, up from 8.95/9.05 percent.

A bond maturing on 15.12.2028 closed at 9.20/30 percent.

A bond maturing on 15.12.2029 closed at 9.70/73 percent, down from 9.73/75 percent.

A bond maturing on 01.07.2030 closed at 9.77/80 percent, down from 9.77/81 percent.

A bond maturing on 01.10.2032 closed at 10.30/40 percent.

The rupee has weakened from 293.25/75 to the US dollar last year, amid record current account surpluses and improvement in budget, denying the usual scapegoats macro-economists point to after depreciating currencies.(Source- ECONOMYNEXT)