Bourse ends steady; rate hike worries weigh

Friday, 13 March 2015 01:45 - - {{hitsCtrl.values.hits}}

Reuters: Stocks ended little changed near a five-week closing low as investor worries over rising interest rates weighed on sentiment, with turnover slumping to a six-week low, well below the daily average so far in the year. The main stock index ended almost flat, at 7,109.07, its lowest close since 5 February, extending the fall to 2.83% in the last nine sessions. The day’s turnover stood at Rs. 491.5 million ($3.70 million), the lowest since 26 January and below this year’s daily average of Rs. 1.37 billion. “Everybody is adopting a wait and see approach,” said Dimantha Mathew, Manager, Research at First Capital Equities Ltd. Investors were confused about the rise in interest rates in a low inflation economy, he said. Sri Lanka’s annual inflation rate hit a record low of 0.6% last month. Yields on T-bills rose between 21 basis points and 38 basis points at a weekly auction on Wednesday with the 91-day T-bill yield rising to a 14-month high of 7.10%. The Central Bank has raised more than Rs. 142 billion ($1.07 billion) this week alone through the sale of development bonds and Government securities. The heavy borrowing has resulted in a spike in market interest rates. Foreign investors were net buyers of Rs. 4.8 million worth of shares, extending the year-to-date foreign inflow to Rs. 2.58 billion. Shares in Ceylon Tobacco Company Plc fell 1.52% and top listed lender Commercial Bank of Ceylon lost 0.27%.

Rupee ends steady amid heavy moral suasion

Reuters: The rupee ended steady on Thursday amid heavy moral suasion by the central bank, while exporters looked for cues on market interest rates, which have been rising due to heavy government borrowing. When the rise becomes attractive, dealers expect exporters to convert dollars into rupees, easing downward pressure on the local currency, dealers said. Actively traded one-week forwards ended steady at 133.60/75 per dollar. “There was heavy moral suasion by the Central Bank and it did not allow the spot rate to go below 132.90,” a currency dealer said on condition of anonymity. The spot currency was steady for the 12th straight session at 132.90/133.20, well within the limits set by the Central Bank. Central Bank officials were not available for comment. Dealers said the market is closely monitoring the interest rates which is on the rise amid heavy Government borrowing. Yields on T-bills rose between 21 basis points and 38 basis points at a weekly auction on Wednesday with the 91-day T-bill yield rising to a 14-month high of 7.10%. The Central Bank has raised more than Rs. 142 billion ($1.07 billion) in the first four days of this week through the sale of development bonds and Government securities. The heavy borrowing has resulted in a spike in market interest rates.