(Colombo) REUTERS: Sri Lankan shares ended down yesterday, snapping two straight gaining sessions to record their second weekly fall, while the rupee was little changed as inward remittances offset dollar demand from banks.
The index rose for the past two sessions after the Central Bank on Tuesday said that the Monetary Board ordered 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 0.02 percent down at 5,771.69, taking its weekly fall to 0.38 percent. So far this year, the index has dropped 4.6 percent.
Equity market turnover was Rs.417 million (US$2.29 million), well below this year’s daily average of about Rs.660.3 million. Last year’s daily average was Rs.834 million.
Foreign investors were net sellers of Rs.54.5 million worth of shares yesterday, extending the year to date net foreign outflow to Rs.2.8 billion of equities, according to index data.
Meanwhile, the Sri Lankan rupee ended steady as month-end inward remittances were balanced by the International Monetary Fund (IMF) lowering the country’s growth forecast for 2019.
The rupee closed at 181.85/182.00 to the dollar. The rupee fell 0.41 percent for the week. However, the currency is up 0.41 percent on 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, Central Bank data showed.