Sri Lanka and India face currency pressure amid shifting bond markets

In Sri Lanka, foreign investor holdings of government securities have increased for seven consecutive weeks, rising approximately 13% over that period to reach LKR 213.4 billion. Despite this steady inflow, the Sri Lankan rupee experienced a decline against the US dollar, reaching a rate of 330.15/25 in the spot market. Concurrently, bond yields in the country saw upward movement across various maturities.

In India, the rupee faced continued downward pressure, falling to 95.91 against the US dollar in early trading. This decline is attributed to a strong American currency, the outflow of foreign funds, and elevated crude oil prices amid geopolitical tensions in West Asia. Market analysts noted that expectations of an interest rate hike by the US Federal Reserve and rising global treasury yields have contributed to the weakening of the local currency.