(Colombo) REUTERS: The Sri Lankan rupee closed firmer for a fifth straight session yesterday, helped by dollar inflows from inward remittances ahead of the traditional new year celebrations, market sources said, while stocks ended higher.
The currency rose 0.4 percent to end at 174.70/85 to the dollar, up from Friday’s close of 175.35/50.
The island nation’s currency gained 1.95 percent in the last five straight sessions and 4.5 percent so far this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence after the country repaid a US $ 1 billion sovereign bond in mid-January.
Dealers expect pressure on the currency to ease with more inward remittances ahead of the traditional Sinhala-Hindu New Year on April 14.
Sri Lanka was plunged into political turmoil in October when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move was unconstitutional, and Wickremesinghe was reinstalled as premier.
Investor sentiment took a big hit as a result of the 51-day political crisis, leading to credit rating downgrades and an outflow of foreign funds from government securities.
The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
Foreign investors bought a net Rs.1.6 billion worth of government securities in the week ended March 27, the fourth net inflow in six weeks, extending year-to-date net foreign buying to Rs.3.3 billion, the latest Central Bank data showed.
The Colombo Stock Exchange index ended 0.19 percent higher at 5,567.77 yesterday, moving further away from their lowest since December 18, 2012, hit on Wednesday.
The benchmark stock index rose 0.31 percent last week, recording its first weekly gain in eight weeks. The index has declined 8.2 percent so far this year.
The market awaits some positive news from the third and final vote on the 2019 budget scheduled for April 5, market sources said.
Turnover was Rs.458.6 million, less than this year’s daily average of Rs.647.7 million. Last year’s daily average came in at 834 million rupees.
Foreign investors bought a net Rs.358.7 million worth of shares yesterday, but they have been net sellers of Rs.5.7 billion worth of equities so far this year.
The latest budget aims to increase government spending by 13 percent in 2019, during which the presidential election must be held, while it has set an ambitious goal to reduce a large fiscal deficit.