Stocks down, rupee up

Wednesday, 27 March 2019 00:10 -     - {{hitsCtrl.values.hits}}


Reuters: Sri Lankan shares closed at their lowest in more than six years on Tuesday, ending weaker for a seventh straight session, dragged down by telecommunication and banking stocks. The market awaits for some positive news from the third and final vote on the 2019 Budget scheduled for 5 April, market sources said. The Colombo Stock Exchange index ended down 0.29% at 5,513.67, its lowest close since 19 December 2012. 

The benchmark stock index slipped 1.36% last week, recording its seventh consecutive weekly drop. The index has declined 8.64% so far this year. 

Turnover was Rs. 311.5 million ($1.76 million), less than half of this year’s daily average of Rs. 669.2 million. Last year’s daily average was Rs. 834 million. 

Foreign investors sold a net Rs. 36.6 million worth of shares on Tuesday, extending the year-to-date foreign outflow to Rs. 6.1 billion worth of equities so far this year. 

The rupee ended firmer at 177.40/60 to the dollar on greenback selling by some banks on behalf of inward remittances and exporter conversions. It had closed at 178.10/20 on Monday. 

The latest budget aims to increase government spending by 13% in 2019, during which presidential election must be held, while it has set an ambitious goal to reduce a large fiscal deficit. 

The stability of Prime Minister Ranil Wickremesinghe’s Government has been questioned by the Opposition since he was reinstated after a 51-day political crisis. 

The rupee has climbed 2.93% this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence after the country repaid a $ 1 billion sovereign bond in mid-January. 

Worries over heavy debt repayment after the 51-day political crisis resulted in a series of credit-rating downgrades, which dented sentiment as the country struggled to repay its foreign loans. 

Sri Lanka is struggling to repay its foreign loans, with a record $ 5.9 billion due this year, including $ 2.6 billion in the first three months. 

The rupee dropped 16% in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. 

Foreign investors bought a net Rs. 3.5 billion worth of government securities in the week ended 19 March, the third net inflow in five weeks, turning year-to-date net foreign buying to Rs. 1.8 billion, the latest Central Bank data showed.