Sri Lanka stocks open lower, rupee steady after signalling
ECONOMYNEXT – Sri Lanka’s rupee weakened slightly on opening, but sporadic dollar sales by state helped keep the currency steady, while stocks opened lower, dealers and brokers said.
The rupee was quoted at 158.95/159.10 rupees against the US dollar in early trading in the spot market before small quantities of sales by state banks helped the rupee return to 158.90/95 levels, dealers said.
State banks that usually act for the monetary authority were seen selling US dollars to small banks at 158.90/95 rupees, dealers said. The US dollar closed at 158.85/95 rupees the previous day.
The interventions were seen as ‘signalling’ market participants said.
The central bank has been following prudent monetary policy keeping liquidity short after confidence weakened in April and May, due to loose policy, analysts say.
Interventions can support a currency as long as liquidity lost due to dollars sales are not replaced (unsterilized sales), allowing short term rates to go up. Rupees are now replaced at 8.50 percent, the ceiling policy rate.
The International Monetary Fund last week said the the rupee should be allowed to weaken if there are capital outflows.
Gilt yields edged marginally higher on Friday on low volumes.
A five-year bond maturing in 2023 was quoted at 10.38/45 percent up from 10.38/42 percent the previous day.
A ten-year bond maturing in 2028 was quoted at 10.60/70 percent, up from the previous day’s closing of 10.57/67 percent.
In equities, The Colombo All Share index was 0.03 percent lower, down 1.75 points to 6,361.87, and the S&P SL20 of more liquid stocks was 0.09 percent lower, down 3.03 points to 3,554.73.
John Keells Holdings was down 80 cents to 156 rupees and Commercial Bank (voting) was down 1 rupee to 99 rupees.
Tokyo Cement was down 70 cents to 38 rupees and Access Engineering was down 50 cents to 17 rupees. (COLOMBO, 08 June, 2018)