CSE at 1-week low on foreign selling; rupee weakens

Reuters: Sri Lankan shares dropped to a one-week low yesterday as foreign investors exited from the island nation’s risky assets, while the rupee ended weaker on dollar demand from importers. 

The benchmark stock index ended 0.17% weaker at 5,375.60, its lowest close since 11 June. The bourse rose 1.61% last week, but has dropped 11.18% so far this year. 

Sri Lanka Finance Minister Mangala Samaraweera yesterday said the economy grew at 3.5% in the first quarter recovering from 1.8% in the previous quarter. 

The Central Bank cut its key interest rates on 31 May to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April. 

Tuesday’s stock market turnover was Rs. 1.1 billion ($ 6.23 million), twice this year’s daily average of about Rs. 550.7 million. Last year’s daily average was Rs. 834 million. 

Foreign investors sold a net Rs. 106.3 million worth of shares yesterday, extending the net foreign outflow for the past seven days to Rs. 522.6 million. The year-to-date net foreign outflow now stands at Rs. 6.04 billion. The rupee ended at 176.80/85 per dollar, compared with Monday’s close of 176.75/85, market sources said. Analysts expect the rupee to weaken further as money flows out of stocks and government securities. The rupee fell 0.14% last week, but is up 3.28% for the year. Exporters had converted dollars as investors’ confidence stabilised after a $ 1 billion sovereign bond was repaid in mid-January. 

The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. Foreign investors bought a net Rs. 311 million worth of government securities in the week ended 12 June, but the island nation’s net foreign outflow was at Rs. 21.6 billion so far this year, Central Bank data showed.