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Rupee rebounds from record low; stocks hit near 2-month high

Comments / {{hitsCtrl.values.hits}} Views / Friday, 2 November 2018 00:00

Reuters: The rupee traded at a record low yesterday but closed firmer due to Central Bank dollar sales. 

Stocks hit a nearly two-month closing high, but foreign investors continue to exit even after newly-appointed Prime Minister Mahinda Rajapaksa’s attempts to resolve the political crisis.

The rupee traded at a record low of 175.65 per dollar, hit in the previous session. 

The rupee ended at 174.00/40 per dollar yesterday, compared with previous close of 175.60/176.00. The rupee has dropped 0.5% since the political crisis unfolded. The rupee weakened 3.7% in October after a 4.7% drop in September against the dollar. 

It dropped 13.4% so far this year.

Sri Lankan opposition leader Mahinda Rajapaksa was appointed Prime Minister last week after President Sirisena dismissed the incumbent in a surprise move that threatens political turmoil in the South Asian country.

The appointment of Mahinda Rajapaksa as Prime Minister prompted protests and a demand for Parliament to be called, to allow lawmakers to choose their leader. The return of Rajapaksa, a former President who crushed a decades-old Tamil insurgency, has stoked fears of fresh political and ethnic division in the island nation of 21 million mostly Sinhalese Buddhists, with Tamil and Muslim minorities. 

The Colombo stock index jumped 2.7% to 6,114.13, slipping from its highest close since 7 September. The Bourse rose 4.9% since Friday, but fell 1.5% last month and slipped 4.01% so far this year.

Analysts said retail investors, who have stayed away from the market during a number of investigations against market manipulation that allegedly occurred under the previous government, actively bargain-hunted after the President’s announcement. 

Data from the Central Bank showed that foreign investors sold government securities worth a net Rs. 3.9 billion ($ 22.40 million) in the week ended 23 October. Sri Lanka has seen a net outflow of Rs. 89.8 billion in securities so far this year. 

Stock market turnover was Rs. 1.5 billion ($ 8.62 million) yesterday, twice this year’s daily average of Rs. 792.7 million. Foreign investors were net sellers of shares worth Rs. 572 million yesterday, extending the year-to-date net foreign outflow to Rs. 13.4 billion worth of equities.

Shares in conglomerate John Keells Holdings Plc ended 3.1% higher, while Distilleries Co of Sri Lanka Plc closed 5.0% firmer.

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