Thursday Nov 14, 2024
Thursday Nov 14, 2024
Tuesday, 22 November 2011 01:42 - - {{hitsCtrl.values.hits}}
The rupee trading froze on Monday after President Mahinda Rajapaksa announced a surprise three per cent devaluation with immediate effect in the 2012 Budget speech to help exporters and cut import costs.
Central Bank Governor Ajith Nivard Cabraal said the devaluation would take effect from Tuesday, but assured that there wouldn’t be any further cut in the exchange rate in the immediate future.
“The rupee traded at 110.40 rupees a dollar before the announcement, but then the trading was totally halted,” said a dealer asking not to be named.
“There was a quote for 114.70 rupees in the market with a wide range, but everybody was waiting for the Central Bank’s direction.”
Analysts from both local and foreign banks in Colombo said they were surprised Rajapaksa announced the devaluation, since it is ordinarily the Central Bank’s purview, but welcomed the move.
The rupee has been under tremendous pressure, with the International Monetary Fund urging more flexibility. Sri Lanka is in the middle of a $ 2.6 billion loan programme with the global lender.
On Friday the rupee weakened to 110.38/40 a dollar from Thursday’s 110.18/20, after a State bank sold dollars at 110.40, raising the dollar trading band by 20 cents to 110.00/110.40 from 109.80/110.20.
The stock market, which closed as the Budget was being presented, fell 0.34 per cent or 20.66 points weaker to 6,119.86 as many investors stayed on the sidelines, awaiting cues from the Budget.
Heavyweight John Keells Holdings PLC, which contributed to 60 per cent of turnover, rose 0.34 per cent to Rs. 175 on last-minute local and foreign institutional interest.
Analysts said a Budget proposal to redistribute 37,000 acres of unused State land given to plantations may hit the sector, while tourism shares may gain on some positive concessions.
The day’s turnover was Rs. 871 million ($ 7.9 million), lowest since 17 November and well below last year’s average of 2.4 billion and this year’s 2.5 billion. Average turnover in the last 10 sessions has been Rs. 757 million.
Total volume was 29.3 million shares, lowest since 11 November, against a five-day average of 62.3 million. The 30-day and 90-day average trading volumes were 57.8 million and 102.3 million. Last year’s daily average was 67.9 million.
The bourse has fallen 9.8 per cent since 1 October and it fell to Asia’s eighth-best performer with a year-to-date loss of 7.8 per cent after being on the top for most of 2011, and giving the best returns in Asia in 2009 and 2010.
The bourse saw a net foreign outflow of Rs. 51.7 million on Monday, and thus far in 2011, offshore investors have sold 16.9 billion, and a record 26.4 billion in 2010.
Losers outnumbered gainers by 105 to 82 on Monday, Thomson Reuters data showed. (Reuters)
