Stocks extend fall to hit over 1-week low; rupee steady

Saturday, 22 June 2019 00:11 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares fell for the second straight session yesterday to hit a more than one-week low, due to continued foreign fund outflows, while the rupee ended steady as dollar demand from importers offset exporters' greenback sales.

The benchmark stock index ended 0.17% weaker at 5,363.50, its lowest closing level since 11 June. For the week, it fell 0.38%. It has dropped 11.38% so far this year. Sri Lanka's economy picked up to 3.7% in the first quarter of 2019, government data showed on Wednesday.

Sri Lanka is in talks with the Beijing-backed Asian Infrastructure Investment Bank for a $ 1 billion dollar loan, the Finance Ministry said, to help an economy that has been badly hit by a deadly terrorist attack in April and political turmoil that began last year.

Sri Lanka plans to raise up to Rs. 480 billion rupees ($ 2.72 billion) in additional debt this year for financing the Government's repayment obligations via local and foreign markets, a document showed on Thursday.

Moody's said in a note on Wednesday that domestic and external obstacles pose challenges to Sri Lanka's refinancing of government debt as recent terrorist attacks in the country could hurt revenue streams, further straining public finances and political issues could resurface.

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.

Friday's stock market turnover was Rs. 496.8 million ($ 2.81 million), less than this year's daily average of about Rs. 546.4 million. Last year's daily average was Rs. 834 million. Foreign investors sold a net Rs. 31.1 million worth of shares yesterday, extending the year-to-date net foreign outflow to Rs. 5.93 billion.

The rupee ended steady at 176.70/80 per dollar, compared with Thursday's close, market sources said. The rupee fell 0.14% last week, but is up 3.34% for the year. Analysts expect the rupee to weaken further as money flows 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. 311 million worth of government securities in the week ended 12 June, but the island nation's net foreign outflow was at Rs. 21.6 billion so far this year, Central Bank data showed.