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Wednesday, 27 February 2019 02:39 - - {{hitsCtrl.values.hits}}
Reuters: Sri Lankan shares and the rupee closed weaker on Tuesday, with investors waiting for directions from next week’s Budget and the outcome of talks between Government authorities and the International Monetary Fund (IMF), market sources said. Sri Lanka has asked the IMF to extend a $1.5 billion loan by another year and relax its tight spending targets ahead of key elections, two Government sources close to the negotiations told Reuters on Tuesday.
The rupee ended at 179.80/90 per dollar, compared with Monday’s close of 179.70/80.
The Colombo Stock Exchange index closed lower for a seventh straight session on Tuesday, shedding 0.07% to 5,822.27 - its lowest close since 25 October 2018.
The benchmark index dropped 1.2% last week, recording its third straight weekly fall. It declined about 1% in January.
Turnover was Rs. 261.96 million ($1.46 million), well below last year’s daily average of Rs. 834 million.
Finance Minister Mangala Samaraweera will present the 2019 Budget on 5 March.
Traders and investors are waiting to see how the market would react to the Central Bank’s surprise announcement on Friday of reducing commercial banks’ statutory reserve ratio (SRR) by 100 basis points after the effective date 1 March, the sources said.
The Central Bank reduced the SRR to increase liquidity and spur credit growth as policymakers struggle to boost a faltering economic growth following a political crisis and a recent rate increase.
Foreign investors exited from Government securities for the first time in five weeks in the week ended 20 February, with net sales of Rs. 1.5 billion, the Central Bank’s latest data showed.
The rupee has climbed 1.6% so far this year as exporters converted dollars and foreign investors purchased Government securities amid stabilising investor confidence after the country repaid a $1 billion sovereign bond in mid-January.
Worries over heavy debt repayment after the 51-day political crisis that resulted in a series of credit rating downgrades dented investor sentiment as the country struggled to repay its foreign loans.
The rupee dropped 16% in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
