Rupee ends marginally down

(COLOMBO) REUTERS: The Sri Lankan rupee closed marginally weaker yesterday, near a record low touched last week, hurt by dollar demand from importers and foreign banks amid outflows from government securities.

Sri Lanka’s Central Bank surprised financial markets yesterday by leaving its key policy rates unchanged, despite heavy pressure on the rupee currency and foreign outflows from government securities.

The Central Bank said it sold US $ 4 million in the market on Monday to defend the currency. It has purchased a net US $ 184 million dollars from the market so far this year.

On Friday, the rupee touched its all-time low of 169.40 per dollar on importer demand for the greenback and foreign selling in government securities, but intervention by the Central Bank helped the currency close firmer, market sources said.

The rupee ended at 169.20/45 per dollar, compared with the previous close of 168.90/169.00.

The rupee weakened 4.7 percent in September against the dollar after a 1.2 percent drop in the previous month, and has declined 10.3 percent so far this year.

The Colombo stock index fell 0.17 percent to 5,807.74, its lowest close since Dec. 13, 2013. The bourse fell 3.6 percent last month and is down 8.8 percent so far this year.

Data from the Central Bank showed foreign investors sold government securities worth a net Rs.10.2 billion (US $60.36 million) in the week ended Sept. 26, the highest since the week to Dec. 6.

Sri Lanka has seen a net outflow of Rs.72.5 billion in securities so far this year.

Stock market turnover was Rs.395.2 million (US $2.34 million) yesterday, less than a half of this year’s daily average of Rs.784.4 million.

Foreign investors sold a net Rs.133.7 million worth of shares yesterday, extending the year-to-date net foreign outflow to Rs.6.01 billion worth of equities.