Foreign investors sell stocks with improving dollar liquidity

The Colombo Stock Exchange (CSE) settlements are now happening on time for foreign funds which faced long delays last year in being settled and getting foreign exchange for sell trades on CSE.

Bankers confirmed this, saying that now the system has enough dollars to meet these demands. Stockbrokers said that now trading under plus three days or T +3 the settlements are fast and frequent, which means that there is an improving dollar liquidity in the market.

A banker said the inward remittances from migrant worker funds were about US$ 250 million (per month) six months ago, but now it has increased to $ 450 million in the past few months. “Many migrant workers have resorted to using proper channels now instead of illegal hawala or undiyal methods as those methods paid them a higher amount because there isn't an exchange rate disparity in the black market and if there is one, it is really negligible,” the banker said. A second banker also confirmed that there is no arbitrage and the exchange rate is at Rs. 363 to a US dollar. Workers’ remittances in 2022 recorded a decline of 31 per cent in comparison to $ 5,491 million in 2021, the Central Bank said early this month. It increased to $ 476 million last year in December. It was $437.5 million last month compared to $259.2 million in the same month in 2022.

Stockbrokers said that the increase in dollar liquidity appears to have contributed to some increased foreign selling in CSE this week, as some funds are using newfound settlement joy to exit CSE.

Wednesday’s foreign selling was at Rs. 410 million.

Foreigners mainly sold John Keells Holdings which saw a net outflow of Rs. 289 million with Hemas Holdings PLC Holdings, seeing a net outflow of Rs. 81 million.