Sri Lanka rupee opens weaker, stocks flat
ECONOMYNEXT – The Sri Lanka rupee opened weaker at 161.95/162.10 rupees against the US dollar Wednesday on importer demand as authorities indicated that the currency would not be defended, while stocks opened flat, dealers and brokers said.
The rupee had closed at 161.95/162.00 rupees against the greenback on Tuesday.
Sri Lanka’s Deputy Finance Minister Eran Wickremaratne has said the authorities will not intervene to defend the rupee, and dealers confirmed the central bank is allowing the market to determine the exchange rate.
In recent weeks excess liquidity in money markets was fuelling importer demand.
If the central bank buys dollars to prevent the rupee going up and create liquidity, and does not follow through by selling dollars, the rupee weakens.
Excess overnight money market liquidity fell by 16.35 billion rupees on Tuesday to 4.98 billion rupees with the Central Bank not seen mopping up liquidity via repo auction.
Gilt yields opened steady in the secondary market for government securities.
A five-year bond maturing in 2023 was unchanged at 9.94/10.00 percent and a ten-year bond maturing in 2028 was steady at 10.22/30 percent.
In equities, Colombo’s All Share index which gained for five straight days opened 0.05 percent lower on Wednesday, down 2.77 points to 6,125.23, however the S&P SL20 index of more liquid stocks was up 0.39 percent, gaining 12.60 points to 3,237.58.
Ceylon Tobacco was trading 10 rupees higher at 1,385 rupees and Chevron Lubricants was down 10 cents to 76.90 rupees.
Commercial Bank was up 50 cents to 124 rupees.
AIA Insurance fell 54.80 rupees to 901 rupees.
AIA Insurance nearly doubled in value the previous day, gaining 430.60 rupees to 955.80 rupees with 1,703 shares traded during the day.
Analysts said some shareholders could be trying to push the share price up to compel AIA Insurance to offer a better buy-back price.
Last August, shareholders had rejected the company’s proposal to delist from the Colombo Stock Exchange where AIA had offered to buy-back shares at 1,000 rupees each, which was a 129 percent premium of the average weighted daily share price for the year to end-June 2018.
Analysts said some shareholders had rejected the buy-back offer because they believed the 1,000 rupees offer-price was low. (COLOMBO, 05 September 2018)