Rupee extends losses for 7th session; stocks down

REUTERS: The rupee fell for the seventh straight session on Friday on dollar demand from banks amid continued security alerts on possible further attacks after the Easter Sunday bombings. 

Stocks closed lower for the second time in seven sessions. Sri Lanka’s Catholic churches have cancelled Sunday mass in the capital Colombo for a second week, citing foreign intelligence warnings of threats to worshippers in the wake of the deadly Easter bombings on churches and hotels.

The rupee fell 0.3% to 177.15/177.60 per dollar from Thursday’s close of 176.60/177, Refinitiv data showed. Analysts fear it could weaken further due to outflows from stocks and government securities. 

The island’s currency lost 1% this week, but is up 3.2% this year, as exporters converted dollars after investor confidence stabilised following the country repaying a $1 billion sovereign bond in mid-January. The rupee dropped 16% in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. 

Foreign investors sold a net Rs. 3.3 billion worth of government securities in the week ended 30 April, extending the net foreign outflow to Rs. 10 billion from the securities so far this year, the latest Central Bank data showed. 

The benchmark stock index ended 0.37% lower on Friday at 5,438.75. It hit its lowest close since 7 December 2012 on 23 April, and also posted its biggest percentage fall since 14 February 2012 on the same day. 

Turnover was Rs. 111.1 million ($627,152), lower than this year’s daily average of Rs. 580.2 million. Last year’s daily average was Rs. 834 million. Foreign investors sold a net Rs. 17.7 million worth of shares on Friday, extending the net foreign outflow to Rs. 4.37 billion worth of equities so far this year. 

The latest instability follows Sri Lanka’s plunge into political turmoil in October last year, when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved Parliament. A court later ruled the move unconstitutional, and Wickremesinghe was reinstalled as Premier. 

Investor sentiment took a big hit as a result of the 51-day political crisis, leading to credit rating downgrades and an outflow of foreign funds from government securities.