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Reuters: Shares rose on Wednesday, recovering from a more than three-week closing low hit in the previous session and snapping three straight sessions of falls, though floods and landslides that killed over 200 people weighed on sentiment.
The extent of the damage is yet to be assessed, with the country’s main agricultural exports - tea and rubber - hit by the worst torrential rains in 14 years.
Analysts said it is too early to evaluate the real impact of the floods and landslides, though short-term disruptions in rubber tapping and plucking of tea leaves and buds could lead to a decline in output.
Inflation could rise in the short term, especially due to crop damages and distribution difficulties with regard to fresh food produce and staple food items, they said.
“Market is up mainly on local buying. Investors are still looking for bargains. They are waiting to see weather prices would come down further,” said Dimantha Mathew, head of research, First Capital Holdings Plc.
The Colombo stock index ended 0.29% stronger at 6,674.32, posting a monthly gain of about 1%. It posted its lowest close since 5 May on Tuesday.
Turnover was Rs. 597.8 million ($ 3.91 million) on Wednesday, less than this year’s daily average of Rs. 901.2 million.
Foreign investors, who have been net buyers of Rs. 19.42 billion worth of equities so far this year, sold shares worth Rs. 43.1 million on a net basis.
Dialog Axiata Plc jumped 3.42%, while conglomerate John Keells Holdings Plc rose 0.60%.
Reuters: The rupee ended slightly firmer on Wednesday due to dollar selling by a foreign bank, but the rupee is expected to weaken as floods and landslides brought damage and dented market sentiment, dealers said.
The extent of the damage is yet to be assessed, with Sri Lanka’s main agricultural exports - tea and rubber - hit by the worst torrential rains in 14 years due to the cyclone ‘Mora’ formed in the Bay of Bengal.
The floods would have an adverse impact on agricultural exports, putting pressure on the rupee, currency dealers said. Analysts said hospitality and manufacturing sectors are likely to be the worst-hit industries.
Rupee forwards were active on Wednesday, with spot-next forwards ending at 152.85/95 per dollar, compared with Tuesday’s close of 152.95/153.00 per dollar.
“We saw some dollar selling by a foreign bank in the latter part of the day, probably from inflows into government securities,” said a currency dealer.
The floods could also put pressure on the overall GDP and government budget deficit with high infrastructure spending, dealers said.
The rupee has been under pressure after the central bank governor on 18 May said the bank would allow gradual depreciation of the currency.
The spot rupee did not trade on Wednesday.
The Central Bank fixed the spot rupee reference rate at 152.50 on 5 May.
Foreign investors bought a net Rs. 14.6 billion ($ 95.61 million) worth of government securities in the two weeks ended 24 May. They have sold a net Rs. 42.1 billion worth of securities so far this year.
