Rupee forwards fall for sixth session

Reuters: Rupee forwards fell for a sixth straight session on Wednesday as importers bought dollars at record low rupee levels amid lower liquidity, dealers said.

Exporters were reluctant to sell the greenback on expectations of further depreciation in the rupee, and the Central Bank’s announcement of plans to raise $3 billion via sovereign bonds had no positive impact on the local currency, they added.

Analysts, however, said the bond sale could bring a little stability in the long term.

The spot rupee, which has not been active since 27 January, did not trade. The Central Bank has fixed the spot trading price at 143.90 through moral suasion.

One-week rupee forwards, which act as a proxy for spot currency, ended at 149.40/50 per dollar, compared with Tuesday’s close of 149.00/15.

The one-week forwards have fallen around 3.4 % since they started to trade after 27 January. The Central Bank, after keeping its monetary policy steady on Tuesday, said the spot rupee “remained broadly unchanged against the U.S. dollar thus far during 2016”.

The bank said it gauges the impact of its recent tightening measures amid the government’s efforts to secure a $1.5 billion IMF loan, which is needed to avert a balance of payments crisis.

Rising debts, rating downgrade and revisions by agencies, slow economic growth, widening fiscal deficit, looming balance of payments crisis, and changes in budget proposals, have dented investor sentiment.

The rupee is under pressure due to foreign investors exiting from government securities and economic woes.

Sri Lanka’s 2015 borrowing jumped over 25 % as compared to the previous year due to high cost of refinancing loans, raised by the previous government without parliamentary approval, the country’s finance minister said last week.

Foreign investors sold Rs. 17.58 billion worth of government securities in the week ended 23 March, data from the Central Bank showed, taking the total offloaded since 30 December to Rs. 83.7 billion ($570.16 million).

CSE rebounds on foreign buying, CB rate move

Reuters:  Shares edged up on Wednesday from a two-week closing low hit in the previous session on buying led by foreign investors and following a Central Bank decision to keep key policy rates steady.

Foreign investors bought a net Rs. 161.7 million ($1.09 million) worth of shares on Wednesday, but have sold Rs. 1.95 billion worth shares so far this year.

The Central Bank kept interest rates on hold Tuesday, preferring to gauge the impact of recent tightening measures amid government efforts to secure a $1.5 billion IMF loan to avert a balance of payments crisis.

Separately, it said Sri Lanka was planning to issue international sovereign bonds, to raise up to $3 billion.

The benchmark share index ended 0.15 %  higher, or 9.14 points firmer, at 6,040.99, gaining from its lowest close since 16 March hit on Tuesday.

“There was a slight shift in sentiment with the Central Bank announcement. That instilled some level of confidence in the overall picture of the economy,” said First Capital Equities Ltd Head of Research Dimantha Mathew.

“But with interest rates on the rise, we don’t see much improvement in the short term. The sentiment will improve in the medium-to-long term.”

Shares in Hemas Holdings Plc rose 1.99 %, while Sri Lanka Telecom Plc climbed 1.04 % and Ceylon Tobacco Company Plc gained 0.35 %.

Turnover was Rs. 769.5 million ($5.19 million), in line with this year’s daily average of Rs. 774.8 million.