Rupee at 31-month high on weak dollar

Thursday, 9 June 2011 00:39 - - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee hit over 31-month high on Wednesday as the Central Bank lowered its dollar trading band amid the greenback’s global decline, while shares fell for a third straight session to their five-week low on retail profit taking.

The Rupee rose to 109.35 a dollar during the early trade, its highest since 30 October 2008, before ending at 109.45/50 from Tuesday’s close of 109.50/60, Reuters data showed, as the Central Bank lowered its dollar trading band by 10 cents to 109.10/60.

“This is mainly due to dollar depreciation globally,” Ajith Nivard Cabraal, the Central Bank Governor told Reuters. The rupee has risen 1.44 per cent so far this year, mainly due to inflows from remittances and foreign direct investments which have jumped 34.9 per cent and 160 per cent, respectively, year-on-year in the first three months of the year.

Sri Lanka’s main share index closed 0.51 per cent or 36.84 points weaker at 7,257.70, its lowest since 5 May, due to retail profit-taking amid selling pressure as investors cashed in stocks to be liquid for the upcoming Softlogic initial public offering, which opens for subscription today (Thursday).

Foreign investors were net sellers of Rs. 265.5 million worth of shares on Wednesday and they have sold a net Rs. 6.64 billion worth shares in 2011 after a record 26.4 billion in 2010.

The day’s turnover was Rs. 3.3 billion ($ 30.1 million), well above last year’s average of 2.4 billion and this year’s daily average of 2.9 billion.

Traded volume was 249.1 million, against a five-day average of 344.4 million. The 30-day and 90-day average trading volumes were 134 million and 99 million, respectively. Last year’s daily average was 67.9 million.

The bourse is still Asia’s best performer in 2011 with a 9.37 per cent gain, after bringing in the region’s top return of 96 per cent last year.