Rupee at 23-month high on FX easing; Stock market snubs Budget

The rupee currency hit a 23-month high yesterday as the Central Bank relaxed foreign exchange controls aiming to boost external investment, while the bourse fell to a two-month low amid a credit crunch as well as apparent less enthusiasm over Budget benefits.

The rupee closed a tad firmer at 111.30/35 a dollar from Monday's 111.35/40, its highest since 15 December, 2008, on thin exporter dollar sales on hopes of a further rise in the currency, Reuters said.

The Central Bank on Tuesday said it expects the rupee, which has already risen 2.7 percent this year, to appreciate further after the forex control easing.

Sri Lanka's main share index fell 61.62 points or 0.95 percent to 6,454.18, its lowest since 17 September, which analysts attributed to lack of credit in the market. It is Asia's best performer in 2010 with a 90.6 percent gain.

NDB Stockbrokers said investor sentiment continued to remain cautious.

 “Indices continued to decline despite positive budget proposals for most listed companies. However foreign investor interest was witnessed in the banking sector,” it added.

Bank Finance & Insurance and Diversified sectors were the highest contributors to the market turnover, while the sector indices decreased by 1.77% and 1.00% respectively.

Commercial Bank made the highest contribution to the market turnover although the share price decreased by Rs. 3.80 (1.39%) and closed at Rs. 273. Foreign holding of the company increased by 127,900 shares.

Sampath Bank also contributed significantly to the market turnover with a crossing of 200,000 shares at Rs. 267, although the price decreased by Rs. 0.60 (0.23%) and closed at Rs. 273. Foreign holding of the company increased by 153,600 shares.

Another crossing was recorded for 61,000 shares of HNB Bank at Rs. 400.

Foreign investors have sold a net 28.1 billion rupees in shares this year, but on Tuesday bought a net 125 million rupees. Turnover was 1.2 billion rupees ($10.8 million), two times the 2009 daily average of 593.6 million rupees.

The bourse is trading at the highest forward price-to-earnings ratio in Asia and global emerging markets at 20.1 times, compared with 13.4 and 12.5 respectively, Thomson Reuters StarMine data showed. The CSE's 14-day relative strength index is at 41.9, towards the lower neutral limit of 30.