Sri Lanka rupee ends firmer on dollar sales; stocks drop

Reuters: ** Sri Lanka's rupee closed slightly firmer on Monday as foreign banks sold dollars, while offshore investors started purchasing government bonds. Stocks snapped a three-day winning streak to end lower. 

** The rupee closed at 181.40/60 per dollar, compared with Friday's close of 181.60/80, market sources said. On Jan. 3, the rupee dropped to an all-time low of 183.00 against the dollar. 

** The currency has appreciated 0.66 percent so far this year. 

 ** Investor confidence in Sri Lanka is stabilising after the country repaid a $1 billion sovereign bond in mid-January, Central Bank of Sri Lanka Governor Indrajit Coomaraswamy told Reuters on Monday. 

 ** "We see signs of stabilisation in investor confidence specially after we paid the loan without much difficulty. But there is much more to be done," Coomaraswamy had said via a text message. 

** However, investors maintained a cautious stance, awaiting cues about the government's borrowing and repayment of foreign loans, analysts told Reuters. 

 ** Worries over heavy debt repayment after a 51-day political crisis have dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first three months. The central bank chief on Jan. 14 said about $5 billion borrowing in the pipeline could help debt repayments. 

 ** The International Monetary Fund on Jan. 16 said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

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

** The rupee declined 4.7 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka's borrowing plans. 

 ** Sri Lanka was plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move was unconstitutional. Wickremesinghe was reinstalled as premier. 

 ** A series of credit rating downgrades after the political crisis made it tough for the island nation to borrow as it faces record high repayments. 

 ** The Colombo Stock Index ended 0.08 percent weaker at 5,973.46 on Monday. The bourse dropped 0.16 percent last week, while the benchmark index lost 5 percent in 2018. 

** Turnover was 465.3 million rupees ($2.56 million), less than last year's daily average of 834 million rupees. 

 ** Foreign investors were net buyers of 192.2 million rupees on Monday. They sold a net 22.9 million rupees worth of shares on Friday. They have been net sellers of 2.07 billion rupees worth of stocks so far this year and 15.5 billion rupees since the political crisis began on Oct. 26, 2018. 

 ** The bond market saw an inflow of 4.7 billion rupees in the week ended Jan. 23. But the market saw an outflows of 81.9 billion rupees between Oct. 25 and Jan. 23, the latest central bank data showed. 

($1 = 181.4500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez)