Shares recover on bargain hunting; rupee gains

(Colombo) REUTERS: Sri Lankan shares rose yesterday, recovering from a more than five-year closing low hit in the previous session, as investors picked up battered stocks, and 2019 budget proposals to increase spending and cut fiscal deficit boosted sentiment, analysts said.

The rupee closed firmer on inward remittances and dollar selling by exporters.

Sri Lankan Finance Minister Mangala Samaraweera yesterday presented the 2019 budget that raises spending while setting an ambitious goal to reduce the country’s large fiscal deficit.

The IMF has agreed to extend Sri Lanka’s US$1.5 billion loan programme by one year and has reached staff level agreement to disburse the sixth tranche of the loan.

The Colombo Stock Exchange index closed 0.28 percent firmer at 5,770.57, edging up from its lowest close since Nov. 28, 2013 hit on Friday. Markets were closed on Monday for a holiday.

The benchmark stock index fell 1.43 percent last week. It declined 2.9 percent in February, its second straight monthly fall.

Turnover was Rs.1.2 billion (US$6.71 million), more than last year’s daily average of Rs.834 million.

The rupee ended firmer at 179.00/25 per dollar, compared with Friday’s close of 179.70/85.

Foreign investors exited from government securities for the second straight week in the week ended Feb. 27, with net sales of Rs.3.4 billion, the Central Bank’s latest data showed.

The rupee has climbed 2 percent so far this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence after the country repaid a US$1 billion sovereign bond in mid-january.

Worries over heavy debt repayment after the 51-day political crisis that resulted in a series of credit rating downgrades dented investor sentiment as the country struggled to repay its foreign loans.

The rupee dropped 16 percent in 2018, and was one of the worstperforming currencies in Asia due to heavy foreign outflows.