REUTERS: The Sri Lankan rupee closed slightly firmer on Thursday, supported by dollar inflows from remittances ahead of the traditional New Year, while stocks ended lower due to foreign outflows in moderate trade.
Markets shrugged off the central bank’s decision on Monday to leave its key interest rates unchanged, a widely expected move to boost an economy struggling in the wake of a political crisis.
The currency ended at 174.45/55 to the dollar, compared with Wednesday’s close of 174.60/70.
Dollar buying by state banks prevented sharp gains in the currency, market sources said.
The island nation’s currency gained 0.26% last week, and 4.8% so far this year, as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence after the country repaid a $1 billion sovereign bond in mid-January.
Dealers expect the pressure on the rupee to ease with more inward remittances ahead of the Sinhala-Hindu New Year on 14 April.
Foreign investors sold a net Rs. 1.9 billion worth of government securities in the week ended 3 April, the first weekly fall in five weeks, but foreign investors were net buyers of Rs. 1.6 billion so far this year, the latest Central Bank data showed.
The Colombo Stock Exchange index ended marginally weaker at 5,576.11. The benchmark stock index rose 1.2% last week, recording its second consecutive weekly gain in nine. The index has declined 7.8% so far this year. Turnover came in at Rs. 459.76 million ($2.64 million), around less than this year’s daily average of Rs. 618 million. Last year’s daily average came in at Rs. 834 million.
Foreign investors sold a net Rs. 164.9 million worth of shares on Thursday, extending the year-to-date net foreign outflow to Rs 6.1 billion worth of equities.