Sri Lanka rupee ends weaker on importer, bank dollar demand; stocks at 6-week low

Reuters: ** Sri Lanka’s rupee ended weaker on Tuesday as importer dollar demand and continued outflows of foreign funds from government bonds and stock markets due to political uncertainty dented investor sentiment. The bourse fell to a six-week low. 

** The Colombo Stock Index fell 0.51 percent to settle at 5,992.36, its lowest close since Nov. 28, as worried investors awaited political cues after the last quarter’s turmoil. The bourse lost 5 percent in 2018.

** Turnover was 933 million rupees ($5.11 million), more than last year’s daily average of 834 million rupees.

** Foreign investors were net sellers of 124.8 million rupees worth of shares on Tuesday. They have been net sellers of 13.9 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 74.3 billion rupees between Oct. 25 and Jan. 2, the latest central bank data showed.

** Last year through Dec. 26, foreign investors pulled a net 22.8 billion rupees out of stocks, and 159.8 billion rupees from government securities, according to bourse and central bank showed data.

** The rupee ended at 182.50/70 on Tuesday, compared with 182.30/40 in the previous session, market sources said. On Thursday, the rupee had fallen to an all-time low of 183.00 against the dollar. 

** The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, Refinitiv Eikon data showed, due to heavy foreign outflows.

** The rupee has declined about 5.2 percent since the political crisis started. 

** The central bank said last week it would stick to an exchange rate policy of cautious intervention in times of excessive volatility in the forex market.

** That policy is designed to maintain a competitive exchange rate and support the rebalancing of the current account, thereby supporting a gradual build-up of reserves, central bank chief Indrajit Coomaraswamy said on Wednesday, unveiling economic policies for 2019.

** President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked. 

** The crisis is expected to ease, though tense relations between the two men could cause fiscal problems, analysts say. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditure in 2019, averting a government shutdown from Jan. 1.

** Sri Lanka plans to increase government spending by 13.2 percent from last year to 4.47 trillion rupees ($24.51 billion) in 2019, the finance ministry said on Tuesday.

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.

($1 = 182.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez Editing by Mark Heinrich)

Sri Lanka stock exchange changes rules to list foreign firms

ECONOMYNEXT - Sri Lanka’s Colombo Stock Exchange said it has amended its listing rules to enable listing and trading of shares of foreign companies on its multi-currency board (MCB).

A foreign firm can list its shares on the CSE’s multi-currency board denominated in a currency approved by the central bank of Sri Lanka, a CSE statement said.

The stock exchange said it also changed its Automated Trading Rules and Central Depository System (CDS) rules to allow trading in shares of foreign firms.

Trading in shares of listed foreign firms will initially be restricted to non-resident investors with an account in the off-shore banking unit of a licensed commercial bank in Sri Lanka and operating through a custodian bank in the CDS.

The changes are aimed at attracting firms already listed in overseas exchanges and seeking a secondary listing.

Officials have said Maldivian hotel companies have shown interest in listing on the MCB.

Sri Lankan rupee ends firmer on mild dollar inflows; stocks down

Reuters: ** The Sri Lankan rupee recovered further on Monday, after hitting a record low in the previous week, helped by mild dollar inflows.

** The Colombo Stock Index fell 0.74 percent to settle at 6,022.99. The bourse had lost 5 percent in 2018.

** The turnover was 405.1 million rupees ($2.22 million), less than half of last year’s daily average of 834 million rupees, as investors awaited political cues after last year’s turmoil.

** Foreign investors were net sellers of 205.9 million rupees worth of shares on Monday. They have been net sellers of 13.7 billion rupees worth of stocks since the political crisis began. The bond market saw outflows of about 74.3 billion rupees between Oct. 25 and Jan. 2, the central bank’s latest data showed.

** Last year until Dec. 26, foreign investors pulled out net 22.8 billion rupees from stocks, and 159.8 billion rupees from government securities, data from the bourse and central bank showed.

** The rupee ended at 182.30/40 on Monday, compared with 182.60/80 in the previous session, market sources said. On Thursday, the rupee had fallen to an all-time low of 183.00 against the dollar.

** The currency fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, Refinitiv Eikon data showed, due to heavy foreign outflows.

** The currency has declined about 5.1 percent since a political crisis began on Oct. 26.

** The central bank last week said it will stick to an exchange rate policy of cautious intervention in times of excessive volatility in the forex market.

** That policy is designed to maintain competitiveness of the exchange rate and support the rebalancing of the current account, thereby supporting a gradual build-up of central bank chief Indrajit Coomaraswamy said on Wednesday, unveiling economic policies for 2019.

** President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked.

** The political crisis is expected to ease, though tense relations between the two men could cause fiscal problems, analysts have said. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditure in 2019, averting a government shutdown from Jan. 1.

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and uncertain policy outlook.

($1 = 182.2000 Sri Lankan rupees)

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

Sri Lankan rupee recovers; bourse turnover hits 10-yr low

Reuters: ** The Sri Lankan rupee recovered from a near record low hit in the previous session to end higher on Friday, boosted by mild dollar inflows aided by some inward remittances.

** The Colombo Stock Index ended 0.15 percent firmer at 6,067.66 on Friday, clocking its second straight weekly gain.

** But its turnover fell to 68.7 million rupees, its lowest since Feb. 24, 2009, and well below last year’s daily average of 834 million rupees, as many investors awaited to see the direction following the political turmoil. The bourse lost 5 percent in 2018. 

** Foreign investors were net buyers of 668,906 rupees ($3,665.24) worth of shares on Friday. But they have been net sellers of 13.5 billion rupees worth of stocks since the political crisis began. The bond market saw outflows of about 67.6 billion rupees between Oct. 25 and Dec. 26, central bank data showed.

** Last year, there were 22.8 billion rupees of outflows from stocks, while government securities suffered a net 159.8 billion rupees of outflows through to Dec. 26, the latest data from the bourse and central bank showed.

** The rupee ended at 182.60/80 on Friday, compared with 182.80/90 in the previous session, market sources said. On Thursday, the rupee traded at an all-time low of 183.00 against the dollar. 

** The currency fell 19 percent in 2018, making it one of the worst performing currencies in Asia, as heavy foreign outflows from government securities weighed.

** The currency has weakened about 5.4 percent since a political crisis began on Oct. 26. 

** The central bank will stick to an exchange rate policy of cautious intervention at times of excessive volatility in the forex market, central bank chief Indrajit Coomaraswamy said on Wednesday, launching economic policies for 2019.

** That policy is designed to maintain the competitiveness of the exchange rate and support the rebalancing of the current account, thereby supporting a gradual buildup of foreign exchange reserves as an external buffer, he added.

** President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked. 

** The political crisis is expected to ease, though uneasy relations between the two men could cause fiscal problems, analysts have said. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditures in 2019 and avert a government shutdown from Jan. 1.

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.

($1 = 182.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Rashmi Aich)

Sri Lankan rupee ends steady near record low; shares slightly weaker

Reuters: ** The Sri Lankan rupee ended steady near a record low on Thursday as foreign fund outflows mainly, from government bonds, continued amid dented investor sentiment after a recent political crisis.

** The currency fell 19 percent in 2018, making it one of the worst performing currencies in Asia, as heavy foreign outflows from government securities weighed. 

** The rupee traded at an all-time low of 183.00 to the dollar, which it hit on Monday, before ending at 182.80/90, compared with 182.80/183.00 in the previous session, market sources said. 

** The currency has weakened about 5.4 percent since a political crisis began on Oct. 26. 

** The central bank will stick to an exchange rate policy of cautious intervention at times of excessive volatility in the forex market, central bank chief Indrajit Coomaraswamy said on Wednesday, launching economic policies for 2019.

** That policy is designed to maintain the competitiveness of the exchange rate and support the rebalancing of the current account, thereby supporting a gradual buildup of foreign exchange reserves as an external buffer, he added.

** President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked. 

** The political crisis is expected to ease, though uneasy relations between the two men could cause fiscal problems, analysts have said. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditures in 2019 and avert a government shutdown from Jan. 1.

** Foreign investors were net sellers of 162.5 million rupees ($889,680) worth of shares on Thursday and they have been net sellers of 13.5 billion rupees worth of stocks since the political crisis began. The bond market saw outflows of about 67.6 billion rupees between Oct. 25 and Dec. 26, central bank data showed.

** Last year, there were 22.8 billion rupees of outflows from stocks, while government securities suffered a net 159.8 billion rupees of outflows through to Dec. 26, the latest data from the bourse and central bank showed.

** The Colombo stock index ended 0.06 percent weaker at 6,058.48 on Thursday. Turnover was 804.7 million rupees, less than last year’s daily average of 834 million rupees. The bourse lost 5 percent in 2018.

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.

($1 = 182.6500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez)

Road Map 2019 - Monetary and Financial Sector Policies for 2019 and Beyond

The Sri Lankan economy faced heightened challenges in 2018, emanating mainly from the global economic, financial and geo-political developments that adversely affected the external sector. There were also several domestic challenges. Political uncertainties, especially during the last quarter of the year, amplified challenges to overall macroeconomic stability. Sub-par economic growth continued in 2018 following subdued growth in 2017. Favourable weather conditions supported a rebound in the agriculture sector while the expansion in services activities has been broad-based.

However, industrial activities slowed in 2018 mainly due to the slowdown in the construction sector. Consumer price inflation remained low in 2018 in spite of temporary ups and downs due to volatile food prices and administrative price adjustments. In response to the tight monetary policy stance pursued by the Central Bank in the past two years, monetary and credit growth decelerated in 2018 from the higher levels observed in 2016 and 2017. An adequate expansion in domestic credit flows driven by demand from the private sector was witnessed during the year.

Full Text

Fitch Rates Sampath Bank’s Basel III Sub Debt ‘A(lka)(EXP)’

LBO – Fitch Ratings has assigned Sampath Bank PLC’s (A+(lka)/Stable) proposed Basel III compliant subordinated debentures an expected National Long-Term Rating of ‘A(lka)(EXP)’.

The notes, which will total LKR7 billion and mature in five years, include a non-viability clause and will qualify as regulatory Tier II capital for the bank. The bank plans to use the proceeds to strengthen its Tier II capital base and support its loan-book expansion. The debentures are to be listed on the Colombo Stock Exchange.

The final rating is subject to the receipt of final documentation conforming to information already received.

KEY RATING DRIVERS

Fitch rates the proposed Tier II instrument one notch below the bank’s National Long-Term Rating of ‘A+(lka)’ to reflect the notes’ subordinated status and higher loss-severity risks relative to senior unsecured instruments. The notes would convert to equity upon the occurrence of a trigger event, as determined by the Monetary Board of Sri Lanka.

Sampath’s National Long-Term Rating is used as the anchor rating because the rating reflects the bank’s standalone financial strength. Fitch believes that the bank’s standalone credit profile best indicates the risk of becoming non-viable.

Fitch has not applied additional notching to the notes for non-performance risk, as they have no going-concern loss-absorption features, in line with Fitch’s criteria. Sampath’s National Long-Term Rating was affirmed on 28 September 2018 and incorporates its evolving franchise, high-risk appetite and improving, but lower-than-peer, capitalisation.

RATING SENSITIVITIES

The rating of the notes would move in tandem with Sampath’s National Long-Term Rating. Failure to maintain capital buffers commensurate with the bank’s risk profile could pressure Sampath’s rating. Conversely, Sampath’s ratings could be upgraded if the bank significantly strengthens its capitalisation and at the same time restrains its growth trajectory.