(Colombo) Reuters: Sri Lankan shares ended marginally higher yesterday, hovering near a six-week high hit last week, as trade turnover touched a more than four-month high amid continued foreign fund outflows, while the rupee ended weaker on dollar demand from importers.
The benchmark stock index ended 0.02 percent firmer at 5,384.93, steadying near its highest close since May 3 hit on Thursday. The bourse rose 1.61 percent last week but it has fallen 11.03 percent this year so far.
The Central Bank cut its key interest rates on May 31 to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April.
Sri Lanka is unlikely to hit its full-year economic growth target of 3-4 percent following the bombings, junior finance minister Eran Wickremeratne told Reuters last month. A Reuters poll has forecast growth to slump to its lowest in nearly two decades this year.
The government’s pension fund has resumed investing in risky assets as the stock market is “extremely undervalued at the moment and is considered a good time to go in”, the Central Bank governor said last month at its monetary policy meet.
Monday’s stock market turnover was Rs.2.18 billion, its highest since February 11 and more than four times this year’s daily average of about Rs.545.6 million. Last year’s daily average was Rs.834 million.
Foreign investors sold a net Rs.27.9 million worth of shares yesterday, extending the net foreign outflow for the past six days to Rs.416.3 million. The year-to-date net foreign outflow now stands at Rs.5.94 billion.
The rupee ended at 176.75/85 per dollar, compared with Friday’s close of 176.70/90, market sources said.
Analysts expect the rupee to weaken further as money flows out of stocks and government securities.
The rupee fell 0.14 percent last week but is up 3.31 percent for the year. Exporters had converted dollars as investors’ confidence stabilised after a US $ 1 billion sovereign bond was repaid in mid-January.
The rupee dropped 16 percent in 2018 and was one of the worst-performing currencies in Asia.
Foreign investors bought a net Rs.311 million worth of government securities in the week ended June 12, but the island nation’s net foreign outflow was at Rs.21.6 billion so far this year, the Central Bank data showed.