29 December 2018 12:00 am
COLOMBO (Reuters) – The Sri Lankan rupee fell to a record low for a sixth straight session yesterday on continued outflows of foreign funds mainly from government bonds as political uncertainty dented investor sentiment.
The Central Bank’s decision to keep the key monetary policy rates steady failed to boost the currency, which is hit by uncertainties after a 51-day political crisis.
The rupee hit an all-time low of 182.90 against the dollar in early trade, surpassing its previous record of 182.35 marked in the prior session, Refinitiv Eikon data showed. It has weakened about 5.4 percent since Sri Lanka’s political crisis began on Oct. 26, and lost 19.1 percent so far this year. The rupee ended at 182.75/183.25 per dollar, compared with 182.10/60 in the previous session.
President Maithripala Sirisena appointed the Cabinet of ministers from his rival party last week after he was forced to reinstate Ranil Wickremeinghe as Prime Minister, 51 days after he was sacked.
The political crisis was expected to ease, though uneasy relations between the two men could cause fiscal problems, analysts have said. Parliament approved Rs.1.77 trillion (US$9.39 billion) to meet four months of expenditures and avert a government shutdown from Jan. 1.
The Colombo stock index ended 0.05 percent weaker at 6,015.23 yesterday. Turnover was Rs.389.2 million (US$2.13 million), less than half of this year’s daily average of Rs.840 million.
Foreigners were net sellers of Rs.69 million rupees of stocks yesterday. They have been net sellers of Rs.13.4 billion since the political crisis began. The bond market saw outflows of about Rs.56.7 billion between Oct. 25 and Dec. 19, Central Bank data showed. Five-year government bond yields have risen 30 basis points since the political crisis began.
Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.