Rupee hits fresh low for 5th straight session; stocks down

Wednesday, 10 October 2018 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee hit a record low for a fifth straight session yesterday on strong dollar demand from importers and foreign banks amid outflows from Government securities, while stocks snapped a four-day winning streak and ended marginally weaker.

The rupee fell to an all-time low of 171 per dollar, surpassing the previous low of 170.75 hit on Monday, on importer demand for the greenback and foreign selling in Government securities and exporter greenback sales, market sources said.

The Central Bank surprised financial markets on 2 October by leaving its key policy rates unchanged, despite heavy pressure on the rupee and foreign outflows from Government securities. The Central Bank said on 2 October that it purchased $ 4 million from the market on the previous day, but it has sold a net $ 184 million to the market so far this year to defend the currency.

The rupee ended at 171.00/20 per dollar, compared with the previous close of 170.50/80.

The rupee has weakened 1.12% so far this month after a 4.7% drop in September against the dollar. It has declined 11.41% so far this year, recording its sharpest fall since 2001.

The Colombo stock index ended 0.47% down at 5,880.38, slipping from its highest close since 20 September hit on Monday. The index fell to its lowest close since 13 December 2013 yesterday. It fell 3.6% last month and is down 7.7% so far this year.

Data from the Central Bank showed foreign investors sold Government securities worth a net Rs. 1.8 billion ($ 10.58 million) in the week ended 3 October. Sri Lanka has seen a net outflow of Rs. 74.3 billion in securities so far this year.

Stock market turnover was Rs. 350.5 million ($ 2.05 million) on Tuesday, half of this year’s daily average of Rs. 772.3 million.

Foreign investors sold a net Rs. 111.8 million worth of shares on Tuesday, extending the year-to-date net foreign outflow to Rs. 6.3 billion worth of equities.