POSTED AT 05:42 PM 03-04-2019
Rupee extends gains; stocks hit 2-week closing high
Image Courtesy: Daily News
REUTERS: The rupee closed firmer on Tuesday as more foreign investors purchased government securities, while inward remittances remained high ahead of the traditional New Year celebrations, market sources said.
The currency extended gains into a sixth session to end firmer at 174.45/60 to the dollar, compared with Monday’s close of 174.70/85.
The island nation’s currency gained 2.09% in the last six sessions and 4.8% 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.
The Colombo Stock Exchange index ended 0.19% higher at 5,578.43 on Tuesday, its highest close since 19 March.
The benchmark stock index rose 0.31% last week, recording its first weekly gain in eight weeks. The index has declined 7.8% so far this year.
The market awaits some positive news from the third and final vote on the 2019 Budget scheduled for 5 April, market sources said.
Turnover was Rs. 433.7 million ($2.49 million), less than this year’s daily average of Rs. 644.1 million. Last year’s daily average came in at Rs. 834 million.
Foreign investors bought a net Rs. 16.8 million worth of shares on Tuesday, but they have been net sellers of Rs. 5.7 billion worth of equities so far this year.
Sri Lanka was plunged into political turmoil in October when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved Parliament. A court later ruled the move was unconstitutional, and Wickremesinghe was reinstalled as Premier.
Investor sentiment took a big hit as a result of the 51-day political crisis, leading to credit rating downgrades and an outflow of foreign funds from government securities.
The rupee dropped 16% in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
Foreign investors bought a net Rs. 1.6 billion worth of government securities in the week ended 27 March, the fourth net inflow in six weeks, extending year-to-date net foreign buying to Rs. 3.3 billion, the latest Central Bank data showed.
The latest Budget aims to increase government spending by 13% in 2019, during which the Presidential election must be held, while it has set an ambitious goal to reduce a large fiscal deficit.