(Colombo) REUTERS: Sri Lankan shares rose for a second session yesterday as banks and diversified stocks continued their rally after the Central Bank asked lenders to cut interest rates, while the rupee closed weaker.
The country’s Central Bank on Tuesday said that the Monetary Board decided to order the licensed banks to reduce interest rates on all loans and advances by at least 200 basis points by Oct. 15, 2019.
The benchmark stock index ended 0.18 percent up at 5,772.76. So far this year, the stock index has dropped 4.6 percent.
Equity market turnover was Rs.273.8 million (US$1.51 million), well below this year’s daily average of about Rs.661.7 million so far. Last year’s daily average was Rs.834 million.
Foreign investors were net buyers for the second straight session, buying a net Rs. 46.3 million worth of shares yesterday, but they have been net sellers of Rs.2.75 billion worth of equities so far this year, according to index data.
Meanwhile, the Sri Lankan rupee weakened after the International Monetary Fund (IMF) lowered the country’s growth forecast for 2019.
The rupee closed 0.16 percent weaker at 181.85/182.00 to the dollar, compared with Wednesday’s close of 181.55/70. However, the currency is up 0.41 percent for the year.
The IMF cut its forecast for Sri Lanka’s 2019 economic growth to 2.7 percent from 3.5 percent, as the Easter Sunday attacks on hotels and churches earlier this year dented tourism and broader business activity.
Foreign outflows from government securities, one of the major reasons behind the rupee’s weakness recently, may not see a respite till the end of parliament elections in 2020, some analysts said. The Central Bank does not release foreign flow numbers on a daily basis, but weekly data in the past four weeks has shown a steady outflow.
Foreign investors sold government securities worth Rs. 545.9 million in the week ended Sept. 18, data showed, extending the net foreign outflow so far this year to Rs.54.9 billion through Sept. 11, the Central Bank data showed.