Rupee recovers from 7-month closing low; stocks rise

(Colombo) REUTERS: 

Sri Lanka’s rupee closed higher yesterday from its lowest level in more than seven months hit in the previous session after foreign fund outflows from government securities showed a declining trend, while stocks rose for the first time in four sessions. 

The rupee ended 0.2 percent firmer at 180.40/60 per dollar, edging up from its lowest since January 28 that was hit on Friday. It closed at 180.80/181.00 on Friday. The currency is up 1.2 percent this year. Foreign investors sold government securities worth Rs.500 million in the week ended September 4, data showed, extending the year to date net foreign outflow to Rs.53.7 billion through September 4, the Central Bank data showed.

Foreigners sold Rs.25.7 billion worth of government securities in the previous two weeks. A senior Central Bank official said on Thursday that outflows from the government securities have been settling following the Central Bank’s rate cut last month.

The Central Bank lowered rates for the second time in four months on August 23 to boost sluggish growth after tourism and investments plummeted following deadly Easter Day bomb attacks by Islamist militants. 

Central Bank Governor Indrajit Coomaraswamy after the policy said the bank was ready to cope with the outflow of US $ 700 million foreign funds invested in Sri Lankan government securities. Exit of some funds had resulted in some pressure on the local currency. 

Meanwhile, the benchmark stock index closed firmer yesterday, ending a three straight session losing streak. It rose 0.31 percent to 5,816.52, edging up from its lowest close since July 25 hit on Friday. The bourse fell 1.6 percent last week. Investors have been in a wait-and-watch mode since the main opposition party named a hardline former defence chief as its presidential candidate. 

So far this year, the stock index has dropped about 3.9 percent. 

Equity market turnover was Rs.381.5 million yesterday, around half of this year’s daily average of about Rs.649.1 million so far. Last year’s daily average was 834 million. 
Foreign investors sold a net Rs.1.1 million worth of shares yesterday, extending the year-to-date net foreign outflow to Rs.1.73 billion worth of equities, according to index data.