Monday 5 November 2018

Sri Lankan rupee falls on uncertainty after heavy foreign outflow; stocks down

Reuters: ** The Sri Lankan rupee ended weaker on Monday as outflows from stocks and government securities due to political uncertainty raised dollar demand.

** Stocks slipped for the second session running, moving further away from their nearly two-month closing high hit last week. Foreign investors sold shares as the political crisis continued after the speaker of parliament said on Monday he would not recognise President Maithripala Sirisena’s sacking of Ranil Wickremesinghe and appointment of Mahinda Rajapaksa as the prime minister.

** The rupee ended at 174.45/60 per dollar on Monday, compared with the previous close of 174.30/50. The rupee has dropped 0.8 percent since the political crisis began on Oct. 26.

** The rupee hit a record low of 175.65 per dollar on Thursday.

** The rupee weakened 3.7 percent in October after a 4.7 percent drop in September against the dollar. It has dropped 13.5 percent so far this year.

** Since the prime minister’s sudden sacking, 7.02 billion rupees has flowed out of the stock market while the bond market saw an outflow of around 11 billion rupees between Oct. 25-31, central bank data showed. So far this year, the island nation has seen 16.5 billion rupees in outflows from stocks and 100.8 billion rupees from government securities, bourse and central bank data respectively showed.


** Sri Lanka’s speaker of parliament said on Monday he would not accept former president Mahinda Rajapaksa as the new prime minister until he proves he commands a majority in parliament.

** The opposition leader Rajapaksa was appointed prime minister on Oct. 26 after President Sirisena dismissed the incumbent in a surprise move that threatens political turmoil in the South Asian country. 

** The appointment of Rajapaksa prompted protests and a demand for parliament to be called to allow lawmakers to choose their leader. The return of Rajapaksa, a former president who crushed a decades-old Tamil insurgency, has stoked fears of fresh political and ethnic division in the island nation of 21 million mostly Sinhalese Buddhists, with Tamil and Muslim minorities.

** The Colombo stock index dropped 0.49 percent to 6,062.09. It hit a near two-month high on Thursday. The bourse rose 4.5 percent last week due to heavy retail investor participation. It has slipped around 4 percent so far this year.


Stock market turnover was 4.13 billion rupees on Monday, more than five times this year’s daily average of 814.7 million rupees.
($1 = 174.4000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; editing by David Stamp)

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