Stocks, rupee extend falls in dull trade

Tuesday, 14 May 2019 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares fell yesterday for an eight straight session, closing at their lowest in more than six-and-a-half years, and the rupee slipped for a third day in dull trade, as the Easter bombings drove off investors.

Sri Lanka widened a curfew yesterday after attacks on mosques and Muslim-owned businesses in the worst unrest since Easter bombings by Islamist militants and blocked Facebook and WhatsApp to stop people inciting violence.

Sri Lanka’s economic growth is expected to slump to its lowest in nearly two decades this year, a Reuters poll showed. Tourism, foreign investment and overall business activity have all dropped after the bombings.

The benchmark stock index ended 0.38% weaker yesterday at 5,307.20, its lowest close since 3 September 2012.

Turnover was Rs. 179.5 million ($ 1.02 million), lower than this year’s daily average of around Rs. 557.6 million. Last year’s daily average was Rs. 834 million.

Foreign investors bought a net Rs. 20 million worth of shares on Friday, but they have been net sellers of Rs. 4.4 billion worth of equities so far this year.

The rupee closed weaker on dollar demand from banks in dull trade.

The rupee dropped 0.3% to close at 176.60/70 per dollar, compared with Friday’s close of 176.10/60, market sources said.

Analysts expect the currency to weaken further as money flows out of stocks and government securities. The rupee gained 0.6% last week and is up 3.4% for the year. Exporters had converted dollars as investor confidence stabilised after a $ 1 billion sovereign bond was repaid in mid-January.

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

Foreign investors sold a net Rs. 10.8 billion worth of government securities in the week ended 8 May, extending net foreign outflow to Rs. 20.8 billion so far this year, Central Bank data showed.