ECONOMYNEXT - The Sri Lanka rupee fell to a new low of 158.20/40 against the US dollar on Tuesday while gilt yields continued to ease and stocks gained 0.18 percent on buying in Ceylon Cold Stores and LOLC, dealers and brokers said.
The rupee weakened to a new low of 158.20/40 rupees against the US dollar in the spot market, on import demand and exporters seen waiting in the side-lines expecting the currency to depreciate further, dealers said.
The central bank took a hands-off approach and was not seen intervening in the market, unlike previous weeks, dealers said. The US dollar closed at 158.00/20 rupees on Monday.
The centarl bank drained 4.0 billion rupees of excess liquidity from markets overnight at 7.50 percent, while banks which gave loans or made payments without deposits to back them borrowed 11.59 billion rupees (printed) from the 8.50 percent window.
Better managed banks deposited 10.6 billion rupees in the central bank's 7.25 percent window, giving net excess liquidity position of 3.01 billion rupees. If the central bank want the float to take effect, analysts say the market should be made short. However the situtation is now much better than the 20 to 30 billion rupees of excess printed money that was in the market in the last week April, when the credibility of the peg broke.
Analysts and economists have called for the central bank to be reformed to prevent it from lowering real wages and living standards and generating political instability generally from devalutionist-inflationism.
Gilt yields closed lower in the secondary bond market.
A five year bond maturing in 2023 closed 10.35/40 percent in two-way quotes, down from 10.42/45 percent the previous day.
A ten-year bond maturing in 2028 closed lower at 10.65/70 percent, down from 10.70/80 percent the previous close.
The Colombo All Share index gained 0.18 percent, up 11.36 points to 6,456.32, and the S&P SL20 of more liquid stocks closed 0.20 percent higher, gaining 7.12 points to 3,616.16.
Market turnover was 325.4 million rupees, down 65 percent from the previous day.
Ceylon Cold Stores (gaining 15 rupees to 990 rupees), LOLC (up 2.90 rupees to 117.90 rupees) and Softlogic Holdings (up 1 rupee to 23 rupees) contributed to the benchmark index gain.
Lanka IOC fell 70 cents to 33.30 rupees and Sri Lanka Telecom closed 1 rupee lower at 26 rupees. Melstacorp was down 40 cents to 57.60 rupees.
Foreign buying was 6.3 million rupees on Tuesday. Foreign selling was 333.1 million rupees the previous day.
Foreign buying Lion Brewery (up 4.80 rupees to 549.50 rupees) was 18 million rupees, followed by 12 million rupees in Softlogic Holdings. Foreign selling in Hemas Holdings was 29 million rupees.
One off-market negotiated trade, or crossing, in Hemas Holdings amounted to 28.8 million rupees. The stock closed unchanged at 125 rupees. (COLOMBO, 15 May 2018)