Shares see best day in 16 years as devalued rupee boosts exporters

REUTERS: Sri Lankan shares surged over 6 percent to their best one-day percentage gain since 2006 after adjustments to spot exchange rate devalued the rupee further and boosted exporters.

The Sri Lankan rupee was traded at 260 to the U.S. dollar yesterday after the Central Bank of Sri Lanka devalued the currency earlier this week.  Actual spot rate to the dollar was adjusted to 260 rupees per dollar.

With that the uncertainty around exchange rates has been eliminated,” said Udeeshan Jonas, chief strategist at CAL Group, adding that the export-oriented companies rallied on the move.

The CSE All-Share index surged 6.81 percent higher at 10,856.07 points at the closing bell, after losing about 10 percent this week until Wednesday. Analysts cited confusion around the exchange rate for the fall. “The upward movement in the index was also supported by the recovery in global markets and oil prices easing a bit,” Jonas said.

Surging crude prices is disrupting the fuel import plans of the country, which is facing its worst financial crisis in a decade with foreign exchange reserves shrinking.

Conglomerate Expolanka Holdings PLC was the top boost, surging 21.12 percent, followed by a 27 percent jump in Commercial Leasing and Finance PLC.

Meanwhile, Sri Lanka’s Central Bank said foreign currency reserves dropped to US$ 2.31 billion by the end of February.  Foreign investors were net buyers in the equity market, picking up shares worth nearly Rs.41.1 million.