Rupee hits record low, stocks close firmer

(COLOMBO) REUTERS: The Sri Lankan rupee fell to a record low of 175.90 to the U.S. dollar yesterday, as political uncertainty triggered by President Maithripala Sirisena’s decision to dissolve parliament weighed on sentiment and also dragged bonds lower, market sources said.

Stocks closed a touch firmer led by market heavyweight John Keells Holdings after the top conglomerate announced a share buyback.

Parliament was dissolved on Friday, two weeks after Sirisena’s sacking of Ranil Wickremesinghe as prime minister and the appointment of pro-china former president Mahinda Rajapaksa in his place.

The rupee ended at 175.60/75 per dollar yesterday, compared with the previous close of 175.10/30. It has weakened more than 1.4 percent since the political crisis began on October 26 and more than 14.4 percent so far this year. Foreigners bought a net Rs.81 million worth stocks yesterday, but have offloaded equities worth Rs.7.7 billion since the political crisis started on October 26.

The bond market saw outflows of about Rs.21 billion between October 25 and November 7, the Central Bank data showed. This year, there have been Rs.17.2 billion of outflows from stocks and Rs.110.8 billion from government securities, bourse and the Central Bank data respectively showed.

The Colombo stock index rose 0.04 percent to 5,980.94 after falling 1.9 percent last week. Heavy retail investor buying had however lifted it 4.5 percent in the week prior to that. It has slipped over 6 percent so far this year.

Stock market turnover was Rs.424.7 million yesterday, around half of this year’s daily average of Rs.820 million.