COLOMBO (Reuters) - Sri Lanka’s rupee ended weaker yesterday as importers purchased U.S. dollars while releasing goods after a week-long strike by customs officers that left 6,000 containers stranded at the country’s main port was called off.
The strike by thousands of officials began a week ago in protest at the sacking of Director General PSM Charles, who authorities blamed for a drop in customs revenue last year. The strike, which also put pressure on food prices, ended after the government agreed to reinstate their boss for three months.
Stocks closed slightly firmer for a second straight session.
The rupee closed at 177.90/178.00 per dollar, compared with Thursday’s close of 177.65/85, market sources said.
Rupee posted a weekly loss of 0.7 percent this week due to importer demand in the latter part of the week.
It rose 2.8 percent last week as exporters converted dollars and foreign investors purchased government securities after a statement from the International Monetary Fund (IMF) and government’s US$1 billion debt repayment boosted confidence.
The currency has appreciated 2.6 percent so far this year. Investor confidence in Sri Lanka is stabilising after the country repaid a US$1 billion sovereign bond in mid-January, the Central Bank chief said last week.
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, with a record US$5.9 billion due this year, including US$2.6 billion in the first three months.
The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
The political crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. Sri Lanka had plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. Wickremesinghe was later reinstalled as Premier. A Court ruled the dissolution was unconstitutional.
The Colombo Stock Index ended 0.07 percent firmer at 5,964.14 yesterday. Bourse fell 0.3 percent for the week, and declined 1 percent in January.
Turnover was Rs.474.7 million (US$2.67 million), less than last year’s daily average of Rs. 834 million. Foreign investors were net buyers for the first time in six sessions and net bought Rs.51.8 million worth shares yesterday. However, they have been net sellers of Rs.3.4 billion worth of stocks so far this year, and Rs.16.8 billion since the political crisis began on Oct. 26, 2018.
The bond market saw inflows of Rs.924.7 million in the week ended Jan. 30, the latest Central Bank data showed.