Rupee, stocks rise after IMF statement

REUTERS:  Sri Lanka’s rupee and shares closed firmer on Thursday, a day after the International Monetary Fund (IMF) said it would resume discussions with the island nation for further disbursal of part of a $1.5 billion loan. 

After a meeting with Sri Lanka’s Finance Minister Mangala Samaraweera, the global lender said the discussions would resume in February, after a political crisis led to talks being delayed by three months. 

The rupee ended at 181.60/75 per dollar on Thursday, compared with 182.30/40 in the previous session, with a foreign bank selling dollars, market sources said. On 3 January, the rupee fell to an all-time low of 183.00 against the dollar.  The rupee fell 19% in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows.

Central Bank Governor Indrajit Coomaraswamy on Thursday said the sharp depreciation was a powerful “pro-growth inducement” for the country’s exports. 

The rupee has declined about 5% since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans.

A series of credit rating downgrades have made it harder for Sri Lanka to borrow as it faces record high repayments of $5.9 billion this year, with $2.6 billion of it due in the first three months. 

Sri Lanka will receive a loan of $1 billion from Bank of China before the end of the March quarter, the chief of the Central Bank said on Thursday, to help the country meet repayments in the coming months. 

The Central Bank on 9 January said that the Reserve Bank of India (RBI) had agreed to provide $400 million to it under a regional swap facility, and it had also requested a further bilateral swap arrangements of $1 billion. 

The Colombo Stock Index ended 0.26% firmer at 5,989.12 on Thursday. The benchmark index lost 5% in 2018. 

Turnover was Rs. 341.7 million, less than half of last year’s daily average of Rs. 834 million. 

Foreign investors sold a net Rs. 7.2 million worth of shares on Thursday. They have been net sellers of Rs. 15.3 billion worth of stocks since a political crisis began on 26 October. The bond market saw outflows of Rs. 77.9 billion between 25 October and 9 January, the latest Central Bank data showed. 

Foreign investors pulled a net Rs. 22.8 billion out of stocks last year, while they net sold Rs. 159.8 billion from Government securities from January through 26 December, Bourse and Central Bank showed data. 

Sri Lanka President Maithripala Sirisena appointed a Cabinet of Ministers from his rival party on 21 December after he was forced to reinstate Ranil Wickremesinghe as Prime Minister, 51 days after he was sacked.