Rupee hits record low on political woes

(Colombo) REUTERS: The Sri Lankan rupee dropped 0.51 percent to a record low yesterday, dented by political uncertainty. Stocks slipped from 

a nearly six-week closing high hit in the previous session as foreign investors exited after President Maithripala Sirisena sacked the
 prime minister.

The rupee dropped to a record low of 175.65 per dollar yesterday, surpassing the previous record low of 174.75 hit in the previous session.

The rupee ended at 175.60/176.00 per dollar yesterday, compared with previous close of 174.60/80. The rupee dropped 1.5 percent since the political crisis unfolded. 

The rupee weakened 3.7 percent in October after a 4.7 percent drop in September against the dollar. It dropped 14.3 percent so far 
this year.

Sri Lankan opposition leader Mahinda Rajapaksa was appointed prime minister last week after President Sirisena dismissed the incumbent in a surprise move that threatens political turmoil in the South Asian country. As president, the pro-China Rajapaksa ushered in billions of dollars of investment from Beijing to help rebuild the country following the end of a 26-year-long civil war against Tamil separatists in 2009. 

The Colombo stock index ended 0.18 percent weaker at 5,953.47, slipping from its highest close since September 19 hit on Tuesday. The bourse shed 3.6 percent last month and slipped 6.5 percent so far this year.

Analysts said retail investors, who have stayed away from the market during a number of investigations against market manipulation that allegedly occurred under the previous government, actively bargain-hunted after the president’s announcement. 

Data from the Central Bank showed that foreign investors sold government securities worth a net Rs.3.3 billion in the week ended October 17. Sri Lanka has seen a net outflow of Rs.85.9 billion in securities so far this year. 

Stock market turnover was Rs.1.4 billion yesterday, more than this year’s daily average of Rs.789.2 million. 

Foreign investors were net sellers of shares worth Rs.139.4 million yesterday, extending the year-to-date net foreign outflow to Rs.12.8 billion worth of equities.