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Sri Lanka rupee weaker, foreign selling continues in stocks

ECONOMYNEXT – Sri Lanka rupee closed weaker at 186.20/30 to US dollar in the spot market on Tuesday while some bond yields edged up and stocks were marginally down at close Tuesday amid foreign selling, dealers and brokers said.

Sri Lanka rupee ended at 186.15/25 to the greenback on Monday.

In equities the Colombo’s All Share Price Index fell 4.20 points to 5,149.57 down 0.08 percent.

The S&P SL20 index of more liquid stocks fell 0.38 percent or 8.55 points to close at 2,268.77.

The market turnover was 2.3 billion rupees with 66 stocks gaining and 84 falling.

Unprecedented money printing and statutory reserve ratio cuts have brought three year bond yields close to the ceiling policy rate of 6.50 percent while government dollar bond yields have risen above rupee yields.

The central bank is giving re-finance at 1 percent to banks to give to Covid-19 distressed companies, far below the inflation rate.

Though the 6.5 percent policy rate may be a check against mal-investments, but stocks have gained 12.5 percent since markets re-opened after being closed during Coronavirus curfew, while foreign investors beat a retreat.

On June 30, foreign investors sold 949 million rupees of stocks while buying 350 million rupees on June 30, taking the total outflow from May 11 to 15.4 billion rupees.

John Keells PLC contributed highest to the fall of ASPI, closing at 122.50 rupees, down by 2.50 rupees a share.

Dialog Axiata PLC shares closed 40 cents down at 11.60 rupees dragging the ASPI down.

Ceylinco Insurance PLC gained 297.90 rupees to trade at 2,098.00 rupees a share, slowing down the ASPI fall.

Crossings were seen in Commercial Bank, Hemas Holdings, Hatton National Bank, John Keells holdings and Sampath Bank.

Commercial Bank closed 78.80 rupees, down 80 cents, Hatton National Bank closed at 113.30 rupees up 30 cents, Sampath Bank closed at 126.40 rupees up 10 cents.

Hemas Holdings closed at 63.60 up 10 cents and John Keells closed at 122.50 down 2.50 rupees.

In the government securities market, maturities between 2022 and 2024 were liquid. dealers said.

A 2-year bond maturing on 15.12.2022 closed at 5.80/90 percent on Tuesday, down from 5.82/90 percent on Monday.

A bond maturing on 15.01.2023 closed at 5.90/6.00 percent, from 5.90/98 percent a day earlier.

A bond maturing on 15.09.2024 closed at 6.45/55 percent, up from 6.48/53 percent.

A bond maturing on 01.05.2025 closed at 6.58/68 percent on Tuesday, up from 6.55/65 percent.

A bond maturing on 01.02.2026 was quoted at 6.80/90 percent, up from 6.70/85 percent/

A bond maturing on 15.10.2027 closed at 6.95/7.05 percent, unchanged from Monday.(Colombo/June30/2020)