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Sri Lanka stocks down 0.16-pct, rupee slides

ECONOMYNEXT – Sri Lanka stocks closed 0.16 percent lower on Wednesday with banks coming under selling pressure while the rupee weakened as much as 155.90 to the US dollar in intra-day trading, brokers and dealers said.

The rupee closed at 155.35/45 against the US dollar in the spot market, down sharply from Monday’s close of 154.90/95. Tuesday was a bank holiday.

The US dollar traded as high as 155.90 during the day, due to panic buying driven by uncertainty after the weekend’s election shock, dealers said.

The central bank seems to be allowing the rupee to trade freely so far. Analysts are watching keenly to see whether the central bank will engage in its usual tactics of intervening, and then releasing liquidity to de-stabilize the banking system.

In the past year when it was mopping up liquidity as credit slowed, the rupee was deliberately kept weak by the central bank, as part of its inflationist-devaluationist policy boosting profits of export firms by destroying real wages of people which has deadly political consequences.

The central bank has a declared policy of ‘intervening to stop excessive volatility’ which means it could intervene at the worst possible time. But a central bank could intervene without further weakening the currency if dollars sales are unsterilized, analysts says.

Bond yields continued to trend upwards across all maturities.

A three-year bond maturing in 2021 was quoted at 9.85/10.00 percent, up from 9.60/70 percent on Monday. An eight-year bond maturing in 2026 was quoted at 10.20/40 percent, up from 10.00/10 percent.

The Colombo All Share index closed 10.73 points lower at 6,532.26. The S&P SL20 index of more liquid stocks closed 0.44 percent lower, down 16.17 points to 3,698.80.

"Uncertainty still pervades the market after weekend’s elections," said Kanishka Perera, Head of Research at Asia Securities.





Market turnover was 654.7 million rupees, down 9.55 percent from the previous close. The market was closed on Tuesday for Maha Shivaratri.

Commercial Bank (down 2.40 rupees to 134.20 rupees), Bukit Darah (down 19.70 rupees to 238.20 rupees) and HNB (down 4 rupees to 243 rupees) contributed to the benchmark index decline.

Sampath Bank fell 50 cents to 319.40 rupees.

John Keells, gaining 1.50 rupees to 156.80 rupees, and Softlogic Holdings, up 2.50 rupees to 22.50 rupees, weighed positively on the All Share index.

Net foreign buying fell sharply to 97.2 million rupees, from Monday’s 289.2 million rupees.

Foreign buying in Softlogic Holdings was 211 million rupees, according to Asia Securities.

Off-market negotiated trades, or crossings, totalled 86.9 million rupees, 13.3 percent of market turnover.

There was one crossing each in John Keells (32.5 million rupees), Ceylon Tobacco (29.9 million rupees) and HNB (24.4 million rupees). (COLOMBO, February 14, 2018)

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