Thursday 27 December 2018

Sri Lankan rupee hits record low; foreign outflows weigh

Reuters: ** The Sri Lankan rupee fell to a record low on Thursday amid dollar demand by state banks and continued outflows of foreign funds mainly from government bonds as political uncertainty dented investor sentiment.

** The rupee hit an all-time low of 182.35 the dollar in early trade, surpassing its previous record of 181.85 marked in the prior session. It has weakened about 5 percent since Sri Lanka’s political crisis began on Oct. 26, and lost 18.7 percent so far this year. 

** The rupee ended at 182.10/60 per dollar, compared with 181.80/182.00 in the previous session.

** President Maithripala Sirisena appointed the cabinet of ministers from his rival party last week after he was forced to reinstate Ranil Wickremeinghe as prime minister, 51 days after he was sacked.

** The political crisis was expected to ease, though uneasy relations between the two men could cause fiscal problems, analysts have said. Parliament approved 1.77 trillion rupees ($9.39 billion) to meet four months of expenditures and avert a government shutdown from Jan. 1. 

** The Colombo stock index ended 0.02 percent weaker at 6,018.19 on Thursday. Turnover was 338.1 million rupees, less than half of this year’s daily average of 840 million rupees.

** Foreigners were net sellers of 6.4 million rupees of stocks on Thursday. They have been net sellers of 13.3 billion rupees since the political crisis began. The bond market saw outflows of about 56.7 billion rupees between Oct. 25 and Dec. 19, central bank data showed. 

** Five-year government bond yields have risen 35 basis points since the political crisis began. 

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.
(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

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