Friday Nov 15, 2024
Friday Nov 15, 2024
Wednesday, 30 December 2015 00:23 - - {{hitsCtrl.values.hits}}
Reuters: The Sri Lankan rupee closed at a record low on Tuesday as dollar demand from importers weighed on the local currency and investors waited for the Central Bank’s decision on interest rates, dealers said.
Sri Lanka’s Central Bank is expected to raise rates by 25 basis points from record lows at its policy meeting on Wednesday, a Reuters poll found, a move that could relieve pressure on the fragile rupee.
The rupee closed at 143.95/144.05 per dollar, down from Monday’s close of 143.90/144.
“A private bank sold dollars to prevent further depreciation. But we don’t know if it was done due to Central Bank direction or a genuine exporter conversion,” a currency dealer said on condition of anonymity. Officials at the Central Bank were not available for comment.
The currency has fallen 6.4 per cent since the Central Bank allowed free float of the rupee on 4 September and it is expected to weaken further in 2016 due to lower reserves and higher imports, say currency dealers.
The rupee has fallen 8.9 per cent so far in the year.
The currency may however strengthen if foreign exchange inflows increase, dealers said.
Finance Minister Ravi Karunanayake told Reuters last week that Sri Lanka is expected to get $1 billion from offshore investors within a month, a move that could boost the island nation’s faltering reserves.
Commercial banks parked 78.2 billion rupees ($543.43 million) of surplus liquidity on Tuesday using the Central Bank’s deposit facility at 6 per cent, official data showed.
Reuters: Sri Lankan shares firmed up in low volume trade on Tuesday after hitting a near two-week low in the previous session, as financials and telecom stocks led the recovery ahead of the Central Bank’s decision on policy rates.
Turnover was however muted as many market participants kept away in the holiday season, traders said.
The main stock index rose 0.28% to touch 6,847.74 at the close, recouping from Monday’s loss, when it reached its lowest closing level since 15 December.
“The buying side is very weak and investors are also waiting for the Central Bank’s direction on the interest rates,” a stockbroker said asking not to be named.
“If they are going to raise the monetary policy rates, investors may shift to fixed and risk free assets, from stocks.”
Sri Lanka’s Central Bank is expected to raise interest rates by 25 basis points from record lows at its policy meeting on Wednesday, a Reuters poll found, a move that could relieve pressure on the fragile rupee.
Foreign investors sold a net Rs. 141.2 million ($981,237) worth of equities, extending the net outflow to Rs. 4.44 billion so far in the year.
Turnover stood at Rs. 306.6 million, less than a third of this year’s daily average of Rs. 1.07 billion.
Top fixed line phone operator Sri Lanka Telecom gained 2.6%, while Commercial Leasing and Finance plc rose 5.3%.
Top lender Commercial Bank of Ceylon, which saw net selling by foreign investors, ended flat, but accounted for around 50% of the day’s turnover.
