Sri Lanka shares fall to 5-1/2-year low; rupee steady after dollar bond sale

Reuters: **Sri Lankan shares fell to a near 5-1/2-year low on Friday as investors sold largecap stocks, outweighing purchases by foreigners. 

** The Colombo Stock Exchange index settled 0.52 percent lower at 5,722.25, its lowest close since Sept. 18, 2013. 

** The benchmark stock index fell 1.63 percent for the week, recording its third straight weekly fall. It declined 2.9 percent in February, its second straight monthly fall. 

** The turnover was 2 billion rupees ($11.21 million), more than double of last year’s daily average of 834 million rupees. 

** Foreign investors bought a net 145 million rupees worth of shares on Friday, but they have been net sellers of 5.97 billion rupees worth of equities so far this year. 

** The rupee closed steady as the island nation sold $2.4 billion in five-year and 10-year U.S. dollar-denominated bonds, successfully tapping the international markets at a time the country is facing strains on its finances. 

** The sale is crucial for the island nation to boost investor sentiment which was dented by rating downgrades by all three rating agencies after a political crisis in October. 

** The rupee closed unchanged at 178.40/60 per dollar for a third day. Market sources said they expected inflows from the sovereign bond sale will help boost the rupee. 

** Sri Lankan Finance Minister Mangala Samaraweera on Tuesday presented the 2019 budget that raises spending while setting an ambitious goal to reduce the country’s large fiscal deficit. 

** The IMF last week agreed to extend Sri Lanka’s $1.5 billion loan programme by one year and has reached staff-level agreement to disburse the sixth tranche of the loan. 

** The rupee has climbed 2.4 percent so far this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence after the country repaid a $1 billion sovereign bond in mid-January. 

** Worries over heavy debt repayment after the 51-day political crisis that resulted in a series of credit-rating downgrades dented investor sentiment as the country struggled to repay its foreign loans. 

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

** Foreign investors exited government securities for the second straight week in the week ended Feb. 27, with net sales of 3.4 billion rupees, the central bank’s latest data showed. 

($1 = 178.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Shreejay Sinha)