(Colombo) REUTERS: Sri Lanka’s share index fell yesterday, hovering near a 5-1/2-year low and recording its sixth straight weekly drop, as investors sold risk assets while they awaited the impact of 2019 budget proposals, market sources said.
Parliament late on Tuesday passed the second reading of the 2019 budget that raises spending while setting an ambitious goal to reduce the country’s large fiscal deficit. The final vote is scheduled for April 5.
Prime Minister Ranil Wickremesinghe-led government’s political stability has been questioned by the opposition since he was reinstated as prime minister after a 51-day political crisis.
The Colombo Stock Exchange index fell 0.29 percent to 5,616.24, hovering near its lowest close since September 9, 2013 hit on Wednesday.
The benchmark stock index fell 1.85 percent during the week, its sixth straight weekly fall. It declined 2.9 percent in February, its second straight monthly fall. The turnover was Rs.1.69 billion, double of last year’s daily average of Rs.834 million.
Foreign investors bought a net Rs.22.6 million worth of shares yesterday, but they have been net sellers of Rs.5.93 billion worth of equities so far this year.
The rupee ended firmer at 178.40/55 to a dollar on greenback inflows and weak dollar demand, compared to Thursday’s close of 178.75/85. Inflows from a sale of US $ 2.4 billion sovereign bonds were expected to boost the rupee.
The rupee has climbed 2.4 percent so far this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence after the country repaid a US $ 1 billion sovereign bond in mid-January.
Worries over heavy debt repayment after the 51-day political crisis that resulted in a series of credit-rating downgrades dented investor sentiment as the country struggled to repay its foreign loans.
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.636.3 million worth of government securities in the week ended March 6, the first net inflow in three weeks, but they have sold a net Rs.2.8 billion so far this year, the central bank’s latest data showed.