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Rupee ends steady near record low

4 January 2019 10:25 am - 0     - {{hitsCtrl.values.hits}}

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REUTERS - The Sri Lankan rupee ended steady near a record low yesterday, as foreign fund outflows mainly, from government bonds, continued amid dented investor sentiment after a recent political crisis.
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.

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


The currency has weakened about 5.4 percent since a political crisis began on Oct. 26. The Central Bank will stick to an exchange rate policy of cautious intervention at times of excessive volatility in the forex market, Central Bank Chief Indrajit Coomaraswamy said on Wednesday, launching economic policies for 2019.


That 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 Sirisena appointed a Cabinet of ministers from his rival party on Dec. 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 (US$9.39 billion) to meet the first four months of expenditures in 2019 and avert a government shutdown from Jan. 1.


Foreign investors were net sellers of Rs.162.5 million (US$889,680) worth of shares yesterday and they have been net sellers of Rs.13.5 billion worth of stocks since the political crisis began. The bond market saw outflows of about Rs.67.6 billion between Oct. 25 and Dec. 26, 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 to Dec. 26, the latest data from the bourse and Central Bank showed.


The Colombo stock index ended 0.06 percent weaker at 6,058.48 yesterday. Turnover was Rs. 804.7 million, less than last year’s daily average of Rs.834 million. The bourse lost 5 percent in 2018.


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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