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Last Updated : 2024-04-23 21:35:00
(Colombo) REUTERS: Sri Lankan shares fell over 1 percent yesterday to their lowest close in nearly five years, as foreign investor selling, a weaker rupee and government plans to curb imports hurt investor sentiment.
Prime Minister Ranil Wickremesinghe said on Monday the government would take measures to impose taxes to curb imports by US $500 million to US $1 billion to face the currency crisis.
The rupee hit a record low for an eighth straight session on Friday despite the Central Bank’s intervention.
It fell to an all-time low of 169.00 per dollar on Friday, weighed down by importer demand for the scarce U.S. currency.
The rupee has weakened 4.5 percent so far this month after a 1.2 percent drop last month, and has declined 9.97 percent so far this year.
Analysts said the acceleration in the rupee’s depreciation was creating panic among investors.
The Colombo stock index declined 1.21 percent to 5,833.58 on Tuesday, its lowest close since December 18, 2013. This was also the sharpest single-day drop since late November 2017.
“It’s another disastrous day, lots of exits happened. It’s mainly because of panic selling, that’s why the market came down sharply in lower turnover,” said Dimantha Mathew, Head of Research at broker First Capital Holdings.
Turnover was Rs.297.6 million the lowest since September 6, and less than half of this year’s daily average of Rs.793.5 million.
Foreign investors sold a net Rs.60.9 million worth of shares yesterday, extending the year-to-date net foreign outflow to Rs.5.6 billion worth of equities.
Analysts said the recent fuel price hike also hurt investor confidence as it could hit corporate earnings. Fuel retailers raised gasoline and diesel prices earlier this month for a third time in four months due to higher global oil prices and a weaker rupee.
Investors are awaiting cues from the national budget in November.
Shares of Ceylon Tobacco Company PLC fell 1.5 percent, Hemas Holdings PLC lost 4.3 percent, Sri Lanka Telecom PLC ended 5.7 percent down and conglomerate John Keells Holdings PLC closed 1.1 percent lower.
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