Rupee hits fresh low for 6th straight session; stocks down

(Colombo) Reuters: The Sri Lankan rupee hit a record low for a sixth straight session yesterday as importers and foreign banks bought the dollar amid outflows from government securities, while stocks ended weaker for a second straight session.

The rupee fell to an all-time low of 171.60 per dollar, surpassing the previous low of 171.00 hit on Tuesday amid foreign selling in government securities and exporter greenback sales, dollar sales by states banks capped the fall, market sources said.

The Central Bank surprised financial markets on October 2 by leaving its key policy rates unchanged, despite heavy pressure on the rupee and foreign outflows from government securities.

The Central Bank said on October 2 it purchased US $ 4 million from the market in the previous day, but it has sold a net US $ 184 million to the market so far this year to defend the currency.

The rupee ended at 171.30/50 per dollar, compared with the previous close of 171.00/20.

The rupee has weakened 1.18 percent so far this month after a 4.7 percent drop in September against the dollar. It has declined 11.47 percent so far this year, recording its sharpest fall since 2001.

The Colombo stock index ended 0.14 percent down at 5,872.02, slipping further away from its highest close since September 20 hit on Monday. The index fell to its lowest close since December 13, 2013 on Tuesday. It fell 3.6 percent last month and is down 7.8 percent so far this year.

Data from the Central Bank showed foreign investors sold government securities worth a net Rs.1.8 billion in the week ended October 3. Sri Lanka has seen a net outflow of Rs.74.3 billion in securities so far this year.

Stock market turnover was Rs.230.5 million yesterday, a third of this year’s daily average of Rs.769.4 million.

Foreign investors were net buyers in sixteen sessions. They bought a net Rs.15.9 million worth of shares yesterday, but have been net sellers of Rs.6.3 billion worth of equities so far this year.