Rupee weakens, stocks gain 0.23-pct
ECONOMYNEXT – The Sri Lanka rupee weakened against the US dollar despite tight liquidity in money markets, as gilt yields edged higher and stocks gained 0.23 percent on buying interest in John Keells Holdings, brokers and dealers said.
The rupee weakened to 158.60/70 rupees against the US dollar in the spot market on importer demand despite tight liquidity conditions, dealers said. The US dollar closed Monday at 158.45/55 rupees.
State-names usually acting on behalf of the monetary authority were seen selling dollars to prevent the rupee weakening further, dealers said.
Money markets were short by 15.82 billion rupees on Tuesday, compared to 13.2 billion rupees the previous day, as the central bank continues to defend the dollar-peg by containing liquidity to check importer demand.
On May 30, the central bank sold down 15 billion rupees of its domestic assets, withdrawing cash and supporting the rupee.
On Tuesday, well-managed banks with excess liquidity depositing 17.4 billion rupees in the central bank’s excess liquidity window, while banks that were short borrowed 22.5 billion rupees from the central bank reverse repo window at 8.50 percent.
A reverse repo auction on Tuesday saw 12 billion rupees get injected into money markets at 8.50 percent, the highest in recent months, leading some analysts to confirm their views that the central bank was protecting the dollar-peg by containing excess liquidity.
Fresh liquidity amounting to 44 billion rupees has been injected via repo auctions since May 31.
In gilts, yields edged higher in the secondary market for government bonds.
A five-year bond maturing in 2023 closed at 10.40/43 percent in two way quotes, up from 10.35/38 percent the previous day.
A ten-year bond maturing in 2028 closed at 10.58/65 percent, up from 10.55/63 percent the previous close.
In equities, the Colombo All Share gained 14.58 points to close 0.23 percent higher at 6,409.51, and the S&P SL20 of more liquid stocks gained 18.29 points, up 0.51 percent to 3,592.66.
John Keells Holdings (gaining 3 rupees to 159 rupees), Nestle (up 45.50 rupees) and Sampath Bank (up 7.40 rupees to 318.40 rupees) contributed to the benchmark index gain.
Market turnover was 680.6 million rupees, down 12 percent from the previous day.
Crossings, or off-market negotiated trades, amounted to 105.3 million rupees and was 15.5 percent of market turnover.
There were two crossings in John Keells Holdings amounting to 42.3 million rupees and one in Sampath Bank for 63 million rupees.
Net foreign buying was 182.9 million rupees, compared to buying of 318.2 million rupees the previous day.
Foreign buying in Sampath Bank was 111 million rupees, followed by 63 million rupees in HNB and 27 million rupees in John Keells Holdings, according to Asia Securities.