(Colombo) REUTERS: The Sri Lankan rupee rose 0.2 percent yesterday in a lacklustre trade on dollar sales by banks, market sources said.
The stock market fell for the third straight session to a near four-month low as foreign investors exited from the island nation’s risky assets.
The rupee ended at 179.50/70, compared with Monday’s close of 179.80/180.00, market sources said. Markets were closed on Tuesday for a public holiday.
The local currency had posted a weekly loss of 0.42 percent in the last week due to high dollar demand from importers and outflows from the stock market. It has risen 1.7 percent so far this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence in Sri Lanka after the country repaid a US $ 1 billion sovereign bond in mid-January. Sri Lanka’s Central Bank is expected to leave its key interest rates steady on Friday, a Reuters poll showed, as the island’s economy slowly recovers from a political crisis that sparked credit downgrades by all three major global rating agencies.
The bond market saw inflows of Rs.3.3 billion in the week ended February 13, recording its fourth straight weekly inflow, the latest Central Bank data showed.
Worries over heavy debt repayment after a 51-day political crisis that resulted in a series of credit rating downgrades dented investor sentiment as the country is struggling to repay its foreign loans.
Sri Lanka has raised its borrowing limit for dollar-denominated bonds to US $ 3 billion and chosen seven lead managers to tap the international market as soon as possible, three government sources said on Tuesday.
The rupee dropped 16 percent in 2018 and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
The Colombo Stock Exchange index fell 0.29 percent to 5,880.17 yesterday falling for the third straight session, its lowest close since October 26.
The benchmark index had fallen 0.92 percent last week, after losing 0.3 percent in the previous week. It declined about 1 percent in January.
The turnover was Rs.172.8 million, well below last year’s daily average of Rs.834 million.
Foreign investors were net sellers of Rs.35 million worth of shares yesterday, extending the year to date net foreign outflow to Rs.5.1 billion worth of stocks and Rs.18.5 billion since the political crisis began on October 26, 2018.