Shares close at 2-week high; rupee weakens

Wednesday, 3 July 2019 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares ended firmer for a third straight session on Tuesday, hitting their highest close in two weeks, while the rupee edged down on importer dollar demand, market sources said.

The benchmark stock index ended up 0.27% at 5,391.21, its highest close since 19 June. The index rose 0.16% last week and posted its first monthly gain for the year in June.

However, the bourse is down 10.92% so far this year. Foreigners sold on a net basis for 16 sessions in 17, the bourse data showed.

Tuesday’s stock market turnover was Rs. 507.3 million ($2.88 million), less than this year’s daily average of about Rs. 542.4 million. Last year’s daily average was Rs. 834 million.

Foreign investors sold a net Rs. 167.6 million worth of shares on Tuesday, extending the year-to-date net foreign outflows to Rs. 6.7 billion.

Meanwhile, the currency edged down to 176.30/40 per dollar, compared with Monday’s close of 176.25/35, market sources said. The rupee rose 0.17% last week, and is up 3.57% so far this year.

The island nation raised $2 billion via 5-year and 10-year sovereign bond sales last week, tapping global capital markets for the second time in three months. Analysts expect the rupee to weaken further as money has been flowing out of stocks and government securities.

The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia.

Foreign investors bought a net Rs. 2.26 billion worth of government securities in the week ended 26 June, but the island nation’s net foreign outflow was at Rs. 18.4 billion so far this year, the Central Bank data showed.

The Central Bank cut its key interest rates on 31 May to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April.

Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the bombings, junior Finance Minister Eran Wickramaratne told Reuters last month. A Reuters poll has forecast growth to slump to its lowest in nearly two decades this year.