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Thursday, 28 March 2019 01:20 - - {{hitsCtrl.values.hits}}
REUTERS: The rupee ended stronger on Wednesday on banks’ dollar sales from inward remittances ahead of the traditional New Year celebrations, market sources said.
The currency ended 0.6% firmer at 176.20/40 to the dollar, up from Tuesday’s close of 177.40/60. The rupee has climbed 1% so far this week and 3.63% this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence after the country repaid a $1 billion sovereign bond in mid-January.
Dealers expect pressure on the currency to ease with more inward remittances ahead of the Sinhala-Tamil New Year on 14 April.
The Colombo Stock Exchange index ended down 0.03% at 5,511.77 on Wednesday, their lowest since 18 December 2012. Shares ended weaker for an eighth straight session, dragged down by large-cap stocks.
The benchmark stock index slipped 1.36% last week, recording its seventh consecutive weekly drop. The index has declined 8.93% so far this year.
The market awaits for some positive news from the third and final vote on the 2019 budget scheduled for 5 April, market sources said.
Turnover was Rs. 165 million ($ 937,233.74), its lowest since 14 February, and well below this year’s daily average of Rs. 660.2 million. Last year’s daily average came in at Rs. 834 million.
Foreign investors sold a net Rs. 58.8 million worth of shares on Wednesday, extending the year-to-date foreign outflows to Rs. 6.2 billion worth of equities so far this year.
Sri Lanka was plunged into political turmoil in October 2018 when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved Parliament. A court later ruled the move was unconstitutional, and Wickremesinghe was reinstalled as Premier.
Investor sentiment took a big hit as a result of the 51-day political crisis, leading to credit rating downgrades and an outflow of foreign funds from government securities.
The island nation is struggling to repay its foreign loans, with a record $ 5.9 billion due this year, including $ 2.6 billion in the first three months.
The rupee dropped 16% in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
Foreign investors bought a net Rs. 3.5 billion worth of government securities in the week ended 19 March, the third net inflow in five weeks, turning year-to-date net foreign buying to Rs. 1.8 billion, the latest Central Bank data showed.
The latest budget aims to increase government spending by 13% in 2019, during which the Presidential election must be held, while it has set an ambitious goal to reduce a large fiscal deficit.
The stability of Prime Minister Ranil Wickremesinghe’s Government has been questioned by the Opposition since he was reinstated after the 51-day political crisis.
