Stocks inch higher in thin trade; rupee weaker

(Colombo) REUTERS: Sri Lankan shares closed slightly higher yesterday, extending gains into a fourth session, but trading volume slumped to a near three-week low. Traders said the Easter day bombings and aftermath violence weighed on investor sentiment. Most investors have shied away from the market since the April 21 bombings that killed more than 250 people.

Sri Lanka is unlikely to hit its full-year economic growth target of 3-4 percent following the Easter Sunday bombings, junior finance minister Eran Wickremeratne told Reuters on Tuesday. A Reuters poll has predicted the growth to slump to its lowest in nearly two decades this year.

The International Monetary Fund (IMF) on May 14 approved the disbursal of a US $ 164 million tranche of a loan programme, bringing the total disbursed to more than US $ 1.16 billion.

Sri Lanka’s economy should still grow 3.5 percent this year and there has not been a revision yet, the IMF added on Thursday.

The benchmark stock index ended 0.08 percent firmer yesterday at 5,295.68. It fell 1.28 percent last week.

Turnover was Rs.127.4 million, the lowest since May 3 and well below this year’s daily average of around Rs.557.8 million. Last year’s daily average was Rs.834 million.

Foreign investors sold a net Rs.30 million worth of shares yesterday, extending the year-todate net foreign outflow to Rs.5.8 billion worth of equities.

The rupee ended 0.23 percent weaker at 176.65/80 per dollar, compared with Tuesday’s close of 176.25/40, market sources said.

Analysts expect the currency to weaken as money flows out of stocks and government securities.

The rupee gained 0.1 percent last week and is up 3.4 percent for the year. Exporters had converted dollars as investor confidence stabilised after a US $ 1 billion sovereign bond was repaid in mid-january.

The rupee dropped 16 percent in 2018 and was one of the worst-performing currencies in Asia.

Foreign investors sold a net Rs.433.2 million worth of government securities in the week ended May 15, extending net foreign outflow to Rs.21.2 billion so far this year, the Central Bank data showed.

Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds.