Shares edge higher, rupee firms

Saturday, 7 July 2012 00:11 - - {{hitsCtrl.values.hits}}

Reuters: The stock market recovered from a three-week low on Friday in light trade as concerns over rising interest rates and rupee volatility kept investors on the sideline.

The Colombo Stock Exchange’s main index edged up 0.08 per cent or 4.03 points to 4,928.64.

“We do not see any sharp gains due to the gloomy economic outlook,” said a stock broker on condition of anonymity.

“Investors expect more rises in interest rates and further devaluation in the currency. Slowing economic growth also is a concern and investors want to wait, though prices of several stocks are very attractive now.” The market has fallen 18.9 per cent so far this year with benchmark T-bill yields reaching a three-year high and the rupee falling around 14 per cent. The IMF has revised down Sri Lanka’s economic growth to 6.75 per cent from its original 7.5 per cent for 2012. The rupee meanwhile closed firmer at 133.30/50 from Thursday’s close of 133.75/85. Dealers said still heavy oil bills may threaten the stability of the rupee though it could appreciate in the near future due to exporter demand for the local unit.

The Central Bank has taken several stringent policy measures this year aimed at cutting imports, including raising policy rates and restricting credit growth, though a prolonged drought has increased oil imports for thermal power.