Rupee ends weaker; stocks slip from nearly 2-month high

Saturday, 3 November 2018 00:38 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended slightly weaker on Friday due to dollar demand for outflows in government securities and stock-related transactions, sources said.

Stocks slipped from its nearly two-month closing high hit in the previous session, as the political turmoil continues despite newly appointed Prime Minister Mahinda Rajapaksa’s attempts to resolve the political crisis.

The rupee had traded at a record low of 175.65 per dollar on Thursday.

The rupee ended at 174.30/50 per dollar on Friday, compared with previous close of 174.00/40. The rupee has dropped 0.7% ever since the political crisis unfolded last Friday.

The rupee weakened 3.7% in October after a 4.7% drop in September against the dollar. It dropped 13.5% so far this year.

Sri Lankan Opposition leader Mahinda Rajapaksa was appointed Prime Minister last Friday 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 dropped 0.36% to 6,092.21, slipping from its highest close since 7 September hit on Thursday. The bourse rose 4.5% since last Friday, but fell 1.5% last month and slipped 4.4% 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. 1.9 billion on Friday, more than twice this year’s daily average of Rs. 798.3 million. Foreign investors turned net buyers first time in 15 sessions, and they were net buyers of shares worth Rs. 66.9 million on Friday. However, foreign investors were net sellers of Rs. 13.3 billion worth of shares so far this year.