Rupee hits all-time low; stocks recover from near 6-year closing low

Reuters: The rupee hit a fresh low on Wednesday due to dollar demand from importers and foreign banks amid outflows from government securities, while stocks ended marginally firmer, erasing early losses. 

On Wednesday, the rupee touched its all-time low of 169.90 per dollar, surpassing its previous low of 169.40 hit on Friday on importer demand for the greenback and foreign selling in government securities, market sources said. 

The Central Bank surprised financial markets on Tuesday by leaving its key policy rates unchanged, despite heavy pressure on the rupee currency and foreign outflows from government securities. 

The Central Bank on Tuesday said it purchased $ 4 million from the market on the previous day, but it has sold a net $ 184 million to the market so far this year to defend the currency. 

The rupee ended at 169.80/90 per dollar, compared with the previous close of 169.20/45. 

The rupee weakened 0.4% so far this month after it fell 4.7% in September against the dollar, and a 1.2% drop in the previous month. It has declined 10.63% so far this year. 

The Colombo stock index ended 0.1% firmer at 5,813.83, erasing early losses to edge up from its lowest close since 13 December 2013 hit on Tuesday. The bourse fell 3.6% last month and is down 8.7% so far this year. 

Data from the Central Bank showed foreign investors sold government securities worth a net $ 10.2 billion ($ 60.36 million) in the week ended 26 September, the highest in a while. Sri Lanka has seen a net outflow of Rs. 72.5 billion in securities so far this year. 

Stock market turnover was Rs. 788.3 million ($ 4.65 million) on Wednesday, in line with this year’s daily average of Rs. 782.3 million. 

Foreign investors sold a net Rs. 1.5 million worth of shares on Wednesday, extending the year-to-date net foreign outflow to Rs. 6.01 billion worth of equities.