Reuters: shares ended Monday weaker at a three-month low in thin trade ahead of a monetary policy announcement by the central bank, as the prime minister’s plan for improving the investment climate failed to cheer the market.

Sri Lanka’s central bank is expected to keep its key interest rates steady later on Monday, a few days ahead of the national budget and the Government’s five-year policy.

Sri Lanka will introduce concessions on investments and a lower tax regime in its budget to boost faltering investment, generate jobs and remove obstacles to growth for start-up companies, Prime Minister Ranil Wickremesinghe said in an economic policy statement on Thursday.

However, investors continued to await the budget, as well as the Central Bank’s key policy rates and corporate earnings. “The lower volume and sideways trade will continue until the budget,” said Hussain Gani, deputy chief executive at Softlogic Stockbrokers.

“Institutional investors are waiting to see if there would be capital gains tax, as the Government proposed some time back, while others are waiting in case of surprises that could have an impact on stocks.”

The benchmark index of the Colombo Stock Exchange ended down 0.24%, or 15.62 points, at 6,409.23, its lowest close since 29 July.

Last week, the index fell 0.35% in its third straight weekly fall. Monday’s turnover was Rs. 142.4 million ($ 962,812.71), less than a fifth of this year’s daily average of Rs. 726.2 million. Foreign investors were net buyers of Rs. 5.7 million worth of equities on Monday, extending the net foreign inflow this month to Rs. 1.21 billion. They have sold a net Rs. 1.74 billion worth of shares this year. Sri Lanka’s quarterly earnings season started two weeks ago, but most locally listed firms report in late October or early November. The national budget is set to be presented on 10 November. Shares in Dialog Axiata Plc fell 0.86% while Ceylon Guardian Investment Trust Plc fell 6.45% and biggest listed lender Commercial Bank of Ceylon Plc fell 0.48%.

Rupee weaker; remittances prevent steeper fall

Reuters: The rupee ended weaker on Monday due to mild importer dollar demand, but month-end inward remittances capped the fall, dealers said.

Rupee forwards were active, with one-week forwards ending weaker at 148.35/40 per dollar compared with Friday’s close of 148.25/30.

“The month-end inward remittances were there, but the rupee ended weaker on mild importer (dollar) demand,” a currency dealer said, asking not to be named.

The Central Bank on Friday raised the spot reference rate by 50 cents to 147.40 per dollar from 146.90 as higher importer dollar demand weighed on the currency while moral suasion by the Central Bank prevented a steeper fall.

The spot rupee is usually managed by the Central Bank, and market participants use the forward market levels for guidance on the currency.

Officials from the Central Bank were not available for comment.

Dealers said foreign selling in government securities also put pressure on the currency.

Foreign investors have sold a net Rs. 16 billion ($ 108.40 million) worth of government securities in the two weeks to 26 October, data from the Central Bank showed. Dealers said the market was waiting for a direction from the national budget, which is due on 10 November.

Dealers said the market had shrugged off a long-awaited economic statement by Prime Minister Ranil Wickremesinghe, who on Thursday said the government would introduce a lower tax regime and concessions on investment in its next budget to boost faltering investment.