CSE hits over 1-week low on profit taking; rupee slips

Friday, 21 June 2019 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: Sri Lankan shares hit a more than one-week low on Thursday due to profit taking and continued foreign fund outflows from the island nation’s risky assets, while the rupee ended weaker on dollar demand from importers.

The benchmark stock index ended 0.37% weaker at 5,372.37, its lowest closing level since June 11, after ending at a nearly seven-week high on Wednesday. The bourse rose 1.61% last week, but has dropped 11.24% so far this year.

Sri Lanka’s economy picked up to 3.7% in first quarter 2019, government data showed on Wednesday. Sri Lanka plans to raise up to Rs. 480 billion ($2.72 billion) in additional debt this year for financing the government’s repayment obligations via local and foreign markets, a document showed on Thursday.

Moody’s said in a note on Wednesday that domestic and external obstacles pose challenges to Sri Lanka’s refinancing of government debt as recent terrorist attacks in the country could hurt revenue streams, further straining public finances and political issues could resurface. Thursday’s stock market turnover was Rs. 136.01 million ($769,940.56), well below this year’s daily average of about Rs. 546.8 million. Last year’s daily average was Rs. 834 million.

Foreign investors sold a net Rs. 34.4 million worth of shares on Thursday extending the year-to-date net foreign outflow to Rs. 5.9 billion.

The rupee ended at 176.70/80 per dollar, compared with Wednesday’s close of 176.65/80, market sources said. The rupee fell 0.14% last week, but is up 3.34% for the year.

Analysts expect the rupee to weaken further as money flows out of stocks and government securities. 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.

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