Rupee ends weaker; stocks hit near 5-yr low on foreign selling

(Colombo) REUTERS: The Sri Lankan rupee ended 0.7 percent weaker yesterday as banks and importers bought the dollar and as stocks declined for a fifth straight session, hitting a near five-year closing low on continued foreign fund outflow.

The rupee ended at 170.60/75 per dollar, compared with the previous close of 169.40/70. 

The rupee fell to an all-time low of 171.60 per dollar on Wednesday, surpassing the previous low of 171.00 hit on Tuesday, due to foreign selling in government securities and exporter greenback sales, market sources said. 

The Central Bank surprised financial markets on October 2 by leaving its key policy rates unchanged, despite heavy pressure on the rupee and foreign outflows from government securities. 

The Central Bank said on October 2 it purchased US $ 4 million from the market in the previous day, but it has sold a net US $ 184 million in the market so far this year to defend the currency.

The rupee has weakened 0.7 percent so far this month after a 4.7 percent drop in September against the dollar. It has declined 10.9 percent so far this year.

The Colombo stock index fell 0.7 percent to 5,774.37, its lowest close since December 3, 2013. It fell 3.6 percent last month and is down 9.3 percent so far this year.

Data from the Central Bank showed foreign investors sold government securities worth a net Rs.6.3 billion in the week ended October 10. Sri Lanka has seen a net outflow of US $ 80.6 billion in securities so far this year.

Stock market turnover was Rs.1.99 billion yesterday, its highest since August 7 and more than twice this year’s daily average of US $ 771.5 million. Foreign investors were net sellers of US $ 1.7 billion worth of shares yesterday, extending the year-to-date net foreign outflow to Rs.8.3 billion worth of equities.

Shares in Hatton National Bank PLC ended 3.8 percent weaker while Lion Brewery PLC fell 4.8 percent, Carson Cumberbatch Plc lost 5.0 percent, Sampath Bank PLC closed 2.7 percent lower and conglomerate John Keells Holdings shed 1.6 percent.