(Colombo) REUTERS: The Sri Lankan rupee recovered further yesterday, after hitting a record low in the previous week, helped by mild dollar inflows.
The Colombo Stock Index fell 0.74 percent to settle at 6,022.99. The bourse had lost 5 percent in 2018.
The turnover was Rs.405.1 million, less than half of last year’s daily average of Rs.834 million, as investors awaited political cues after last year’s turmoil.
Foreign investors were net sellers of Rs.205.9 million worth of shares yesterday. They have been net sellers of Rs.13.7 billion worth of stocks since the political crisis began. The bond market saw outflows of about Rs.74.3 billion between October 25 and January 2, the Central Bank’s latest data showed.
Last year until December 26, foreign investors pulled out net Rs.22.8 billion from stocks and Rs.159.8 billion from government securities, data from the bourse and the Central Bank showed.
The rupee ended at 182.30/40 yesterday, compared with 182.60/80 in the previous session, market sources said. On Thursday, the rupee had fallen to an all-time low of 183.00 against the dollar.
The currency fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, Refinitiv Eikon data showed, due to heavy foreign outflows.
The currency has declined about 5.1 percent since a political crisis began on October 26.
The Central Bank last week said it will stick to an exchange rate policy of cautious intervention in times of excessive volatility in the forex market.
That policy is designed to maintain competitiveness of the exchange rate and support the rebalancing of the current account, thereby supporting a gradual build-up of, the Central Bank chief Indrajit Coomaraswamy said on Wednesday, unveiling economic policies for 2019.
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 tense 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 expenditure in 2019, averting a government shutdown
from January 1.
Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and uncertain policy outlook.