Shares hit 1-1/2-week closing high; rupee strengthens

(Colombo) REUTERS: Sri Lankan shares ended steady yesterday, hitting their highest close in more than a week, while the rupee edged up on dollar sales as month-end inward remittances surpassed greenback demand from importer, market sources said.

The benchmark stock index ended up 0.08 percent at 5,376.67, its highest close since June 19. The index rose 0.16 percent last week and posted its first monthly gain for the year in June, rising 1.15 percent. However, the bourse is down 11.16 percent so far this year. 

Foreigners sold on a net basis for 15 sessions in 16, the bourse data showed. 

Yesterday’s stock market turnover was Rs.252.6 million, well below this year’s daily average of about Rs.542.7 million. Last year’s daily average was Rs.834 million. 

Foreign investors sold a net Rs.162.9 million worth of shares yesterday, extending the year-to-date net foreign outflows to Rs.6.5 billion. 

The currency edged up at 176.25/35 per dollar, compared with Friday’s close of 176.40/50, market sources said. The rupee rose 0.17 percent last week and is up 3.6 percent so far this year. 

The island nation raised US $ 2 billion via five-year and 10-year sovereign bond sales last week, tapping global capital markets for the second time in three months. 

Analysts expect the rupee to weaken further as money flows out of stocks and government securities. 

The rupee dropped 16 percent in 2018 and was one of the worst-performing currencies in Asia. 

Foreign investors bought a net Rs.2.26 billion worth of government securities in the week ended June 26, but the island nation’s net foreign outflow was at Rs.18.4 billion so far this year, the Central Bank data showed.

The Central Bank cut its key interest rates on May 31 to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April. 

Sri Lanka is unlikely to hit its full-year economic growth target of 3-4 percent following the bombings, junior Finance Minister Eran Wickramaratne told Reuters last month. A Reuters poll has forecast growth to slump to its lowest in nearly two decades this year.