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Rupee ends near record low

3 January 2019 11:54 am - 0     - {{hitsCtrl.values.hits}}

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(Colombo) REUTERS: The Sri Lankan rupee ended near record low yesterday due to continued outflows of foreign funds mainly from government bonds, as political uncertainty dented investor sentiment.

The currency fell 19 percent in 2018, making it one of the worst performing currencies in Asia, as heavy foreign outflows from government securities weighed on the local currency. 


The rupee traded at an all-time low of 183.00 hit on Monday against the dollar before ending at 182.80/183.00 per dollar, compared with 182.70/90 in the previous session, market sources said. 


The local currency has weakened about 5.4 percent since Sri Lanka’s political crisis began on October 26. 


The country’s Central Bank will continue to adopt an exchange rate policy, with cautious interventions at times of excessive volatility in the forex market, Central Bank Chief Dr. Indrajit Coomaraswamy said yesterday, launching 2019’s economic policies.


The policy is designed to maintain the competitiveness of the exchange rate and support the rebalancing of the current account, thereby supporting a gradual buildup of foreign exchange reserves as an external buffer, he added.


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


The political crisis is expected to ease, though uneasy relations between the two men could cause fiscal problems, analysts have said. Parliament has approved Rs.1.77 trillion to meet the first four months of expenditures in 2019 and avert a government shutdown from January 1.


Foreign investors were net buyers of Rs.19.2 million worth of shares yesterday but they have been net sellers of Rs.13.4 billion worth of stocks since the political crisis began. The bond market saw outflows of about Rs.67.6 billion between October 25 and December 26, the Central Bank data showed.


Last year, there were Rs.22.8 billion of outflows from stocks, while government securities suffered a net Rs.159.8 billion of outflows through December 26, the latest data from the bourse and the Central Bank showed.


The Colombo stock index ended 0.16 percent firmer at 6,062.20 yesterday, The bourse lost 5 percent in 2018. Turnover was Rs.211.5 million, well below last year’s daily average of Rs.834 million.


Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.

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