Stocks end near 6-1/2-year low; rupee gains

(COLOMBO) REUTERS: Sri Lankan shares recouped early losses yesterday, but closed at their lowest levels in six-and-a-half years on lingering investor concerns following the Easter Sunday bombings.

Investigators have dismantled a major part of the network linked to the Easter Sunday bombings, Prime Minister Ranil Wickremesinghe said yesterday, but warned the chance of further Islamist militant attacks could not be ruled out.

The benchmark stock index ended 0.07 percent weaker yesterday at 5,382.54, its lowest close since Dec. 5, 2012.

Turnover was Rs.333.3 million (US$1.89 million), lower than this year’s daily average of Rs.575.5 million. Last year’s daily average was Rs.834 million.

Foreign investors sold a net Rs.57.1 million worth of shares yesterday, extending the net foreign outflow to Rs.4.5 billion worth of equities so far this year.

The rupee closed firmer yesterday on dollar selling by banks, snapping an eight-session losing streak and off a near sixweek low hit on Monday.

The rupee ended at 176.90/177.10 per dollar, compared with Monday’s close of 177.55/75, market sources said.

Analysts say it could weaken further due to outflows from stocks and government securities.

The island’s currency lost 1 percent last week, but is up 3.2 percent this year as exporters converted dollars after investor confidence stabilised following the repayment of a US$1 billion sovereign bond in mid-january.

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

Foreign investors sold a net Rs.3.3 billion worth of government securities in the week ended April 30, extending the net foreign outflow to Rs.10 billion from the securities so far this year, the latest Central Bank data showed.

The latest instability follows Sri Lanka’s plunge into political turmoil in October last year, when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, and Wickremesinghe was reinstalled as Premier. Investor sentiment took a big hit as a result of the 51-day political crisis, leading to credit rating downgrades and an outflow of foreign funds from government securities.