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Rupee falls for 6th session; stocks snap 5-day losing streak

3 May 2019 12:01 am - 0     - {{hitsCtrl.values.hits}}


REUTERS - The Sri Lankan rupee fell for the sixth consecutive session yesterday on dollar demand from banks amid security alerts on possible further attacks after the Easter Sunday bombings. 

Stocks closed lower for the first time in six sessions. 

Sri Lankan officials said on Tuesday security forces were maintaining a high level of alert after intelligence reports that Islamist militants were planning fresh attacks before the start of Muslim holy month of Ramadan. 

The U.S. ambassador to Sri Lanka said on Tuesday that some of the Islamist militants behind the Easter Sunday bombings that killed more than 250 people were likely still at large and could be planning more attacks. 

The rupee fell 0.34 percent to 176.60/177.00 per dollar from Tuesday’s close of 176.00/30, market sources said.Sri Lankan markets were closed on Wednesday for the International Labour day. 

Analysts fear it could weaken further due to outflows from stocks and government securities. 

The island’s currency lost 0.8 percent last week, but is up 3.8 percent this year, as exporters converted dollars amid stabilising investor confidence after the country repaid a US$1 billion sovereign bond in mid-January. 

The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. 

Foreign investors bought a net Rs. 268.2 million worth of government securities in the week ended April 24, the first net buying in four weeks, but they have sold a net Rs.6.6 billion worth of securities so far this year, the latest Central Bank data showed. 

The benchmark stock index ended 0.36 percent lower yesterday at 5,458.78. It hit its lowest close since Dec. 7, 2012 on April 23 and also posted its biggest percentage fall since Feb. 14, 2012 on the same day. 

Turnover was Rs.148.6 million, lower than this year’s daily average of 5 Rs.86.2 million. Last year’s daily average was Rs.834 million. 

Foreign investors bought a net Rs.9.4 million worth of shares yesterday, but they have been net sellers of Rs.4.4 billion worth of equities so far this year. 

The latest instability follows Sri Lanka’s plunge into political turmoil in October last year, when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, and Wickremesinghe was reinstalled as Premier. 

Investor sentiment took a big hit as a result of the 51-day political crisis, leading to credit rating downgrades and an outflow of foreign funds from government securities. 

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