REUTERS: Sri Lankan shares on Friday hit their lowest close in more than a month, dragged down by telecom stocks, while investor sentiment continued to remain low on concerns about rising interest rates.

The Colombo stock index ended down 0.06% at 6,084.99, its lowest since Feb. 6. It shed 0.27% during the week, posting its third straight weekly decline.

Foreign investors were net buyers for the eighth straight session on Friday, purchasing shares worth Rs. 174.96 million ($ 1.16 million), and extending the year-to-date net foreign inflow to Rs. 2.12 billion worth of equities.

Turnover was Rs. 711 million, more than this year’s daily average turnover of Rs. 690.1 million.

“Foreigners are the only people active in the market these days as not a lot of activities are taking place,” said Dimantha Mathew, Head of Research, First Capital Equities Ltd.

“The market is slowly coming down with rising rates and economic uncertainty.”

Traders said there were concerns after the International Monetary Fund urged Sri Lanka’s Central Bank to be ready to tighten monetary policy if credit growth or inflation does not abate.

Shares of Dialog Axiata Plc dropped 0.89%, while Commercial Leasing and Fiance Plc plunged 10.71% and conglomerate John Keells Holdings dropped 0.14%.

Yields on treasury bills have risen to a more-than-four-year high since October, while the Central Bank has kept the key policy rates on hold.

Rupee ends slightly weaker in dull trade

REUTERS: The Sri Lankan rupee ended slightly weaker on Friday in dull trade as importer dollar demand surpassed exporter greenback sales, a day after the central bank’s moral suasion curbed further decline, dealers said.

Rupee forwards were active, with two-week forwards ending at 152.25/45 per dollar, compared with Thursday’s close of 152.20/30.

“We didn’t see much of activity and the (inward) remittances were also very low, though there were some import demand,” said a currency dealer on condition of anonymity. nother dealer said the trading was light after Thursday’s moral suasion reversed some deals.

Central bank officials were not available for comment.

International Monetary Fund on Wednesday urged the country’s central bank to rebuild foreign reserves while maintaining exchange rate flexibility.

Following its second review of a $ 1.5-billion three-year loan program, the IMF said it had discussed with Sri Lankan authorities the need to push forward with reforms due to an uncertain external environment.

Dealers expect the rupee to depreciate between 6 percent and 8 percent this year.

Analysts said inflow from up to $ 1.5 billion sovereign bond issue sooner than later could help ease some pressure on the currency.

Sources who know about the bond deal said top central bank officials have already left for the United States for a road show on the sovereign bond issue announced last month.

S&P Global Ratings said in a statement on Tuesday it considers exchange rate stability to remain a major priority for Sri Lanka’s policymakers and its Central Bank, limiting monetary flexibility.

The Central Bank is struggling to maintain a flexible exchange rate in the face of heavy foreign outflows from government securities. The rupee has depreciated 1.2% so far this year, having lost 3.9% of its value against the dollar last year.

Foreign investors bought a net Rs. 701 million ($ 4.64 million) worth of government securities in the week ended 1 March, recording the first weekly net inflow for the year. They have sold a net Rs. 63.76 billion of such instruments so far this year.