Sri Lanka rupee opens slightly weaker, stocks up marginally

ECONOMYNEXT – The Sri Lanka rupee opened slightly weaker at around 176.40/70 rupees against the US dollar in the spot market Thursday, as equities gained marginally on banking stocks while bonds opened to muted sentiment, market participants said amid an ogoing political crisis.

Sri Lanka’s parliament is expected to meet at 1000 am after a Mahinda Rajapaksa was defeated on a no confidence vote on November 14.

The rupee was being quoted at a wide band compared to the previous day’s closing of around 176.45/55 rupees against the greenback.

Central Bank Governor Indrajit Coomaraswamy on Wednesday said enough foreign inflows were expected to rollover 1.5 billion dollars of debt in early 2019.

Reserves will also be boosted from expected swaps and loans to state banks from Abu Dhabi, Oman and Qatar, he said.

Foreign reserves had fallen to 7.2 billion US dollars by 14 November from 7.9 billion dollars in October.

Sri Lanka is defending the currency and printing money to fill liquidity shortages with a soft-peg with the US dollar under pressure, and capital outflows from bond and stock markets.

The secondary bond market opened to dull activity levels with no quotes being offered as Sri Lanka’s deepening constitutional crisis weigh on investor sentiment.

The previous day longer-term tenures were more active with a bond maturing in 2027 closing at 12.30/40 percent, narrowing from the previous closing of 12.10/50 percent.

A deal with the International Monetary Fund is in limbo until the eventual government of Sri Lanka confirms that it wants to go ahead with the programme.

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The Central Bank has raised policy rates by 50 basis points and cut the reserve ratio by 150 basis points.

Stocks gained in early trading on buying interest in banking stocks.

Colombo’s All Share index gained 0.07 percent in early trading, up 4.03 points to 5,951.39, while the S&P SL20 index of more liquid stocks gained 0.42 percent, up 12.83 points to 3,100.31.

Hatton National Bank was up 2.50 rupees to 217.50 rupees and Sampath Bank gained 2.10 rupees to 230 rupees.

 

Access Engineering was trading 30 cents higher at 16.10 rupees. (COLOMBO, 15 November 2018)

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