Rupee ends weaker; CSE remains positive

Saturday, 9 February 2019 00:33 - - {{hitsCtrl.values.hits}}

REUTERS: The rupee ended weaker on Friday as importers purchased dollars while releasing goods after a week-long strike by customs officers that left 6,000 containers stranded at the country’s main port was called off. Stocks closed slightly firmer for a second straight session.

The strike by thousands of officials began a week ago in protest of the

sacking of Director General PSM Charles, who authorities blamed for a drop in

customs revenue last year. The strike, which also put pressure on food prices, ended after the Government agreed to reinstate their boss for three months.

The rupee closed at 177.90/178.00 per dollar, compared with Thursday’s close of 177.65/85, market sources said.

Rupee posted a weekly loss of 0.7% this week due to importer demand in the latter part of the week. It rose 2.8% last week as exporters converted dollars and foreign investors purchased government securities after a statement from the International Monetary Fund (IMF) and the Government’s $ 1 billion debt repayment boosted confidence.

The currency has appreciated 2.6% so far this year.

The Colombo Stock Index ended 0.07% firmer at 5,964.14 on Friday. Bourse fell 0.3% for the week, and declined 1% in January.

Turnover was Rs. 474.7 million ($2.67 million), less than last year’s daily average of Rs. 834 million.

Foreign investors were net buyers for the first time in six sessions and net bought Rs. 51.8 million worth shares on Friday. However, they have been net sellers of Rs. 3.4 billion worth of stocks so far this year, and Rs. 16.8 billion since the political crisis began on 26 October 2018.

The bond market saw inflows of Rs. 924.7 million in the week ended 30 January, the latest Central Bank data showed.

Investor confidence in Sri Lanka is stabilising after the country repaid a $ 1 billion sovereign bond in mid-January, the Central Bank Chief said last week.

Worries over heavy debt repayment after a 51-day political crisis that resulted in a series of credit rating downgrades dented investor sentiment as the country 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.

The political crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. Sri Lanka had plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved Parliament. Wickremesinghe was later reinstalled as Premier. A court ruled the dissolution was unconstitutional.