An Echelon Media Company
Friday January 21st, 2022

Sri Lanka stocks gain after jump in forex reserves; but foreigners exit 

ECONOMYNEXT – Sri Lanka stock index gained Thursday (30), a day after the central bank said its foreign exchange reserves have almost doubled compared to a month ago due to inflows, brokers said.

However, foreign investors continued selling a net of 200 million rupees’ worth of shares on Thursday. The bourse has suffered a net foreign outflow of 51.8 billion rupees so far this year.

“With the credit clearing out of the market and the country’s reserves hitting 3.1 billion dollars, there are a lot of positive sentiments in the market and we expect January to be really strong,” a Colombo-based analyst said.

Sri Lanka’s foreign reserves had reached 3.1 billion US dollars by December 29, Central Bank Governor Nivard Cabraal said in a message. The reserves have plummeted over 70 percent in the first 11 months of the year and have reached 1.6 billion dollars by end November.

However, another analyst said this increase in inflows is not enough to clean out the mess Sri Lanka’s economy is in right now and that the government will eventually have to go to the International Monetary Fund.

All Share Price Index (ASPI) gained 0.88 percent or 104.57 points to close at 12,019.75, bourse data showed.

The main ASPI index has fallen in the first two sessions of this week amid concerns over a central bank move to preserve U.S. dollars of tightening foreign exchange liquidity further.

The more liquid S&P SL 20 index, up 0.56 percent or 23.68 points to close at 4,225.23.

Brokers have cautioned on a downside risk of Sri Lanka’s ability to repay its external debts, amid concerns that the island nation’s risk of sovereign debt default is on the rise after the central bank’s expected inflow of 11.45 billion US dollar including exports, remittances, and revenue from tourism did not materialize.

The central bank on Monday ordered licensed banks to surrender 25 percent of its foreign currency holdings through foreign remittances, export proceeds, and foreign currency conversions from individual customers on a weekly basis.

Analysts said the move will further tighten foreign exchange liquidity in the money market, making it more difficult for importers. They also said the central bank’s move showed the desperateness of or foreign currency.

The day’s turnover was 6.4 billion rupees, above this year’s average daily turnover of 4 billion rupees.

Browns Investment PLC, LOLC Holdings and Softlogic Holdings gained to keep ASPI in the green.

Browns Investment gained 3.55 percent to close at 14.60 rupees a share.

LOLC Holdings gained 1.12 percent to close at 1,113.25 rupees a share while Softlogic Holdings gained 12.62 percent to close at 34.80 rupees a share.

Expolanka, the market heavyweight that has business in freight and exports moved to red today, bucking the trend, slipped 0.60 percent to close at 373.00 rupees a share.

Leave a Comment

Your email address will not be published. Required fields are marked *

Your email address will not be published. Required fields are marked *


Leave a Comment

Your email address will not be published. Required fields are marked *

Your email address will not be published. Required fields are marked *