By Shihar Aneez
COLOMBO, Dec 31 (Reuters) - Sri Lankan shares ended the year more than 40 percent down but gained slightly during the last trading session of 2008 on Wednesday, and the rupee inched up in limited trade as a state bank quoted firmer rates.
The Colombo All Share index .CSE gained 1.25 percent on Wednesday, up 18.49 points to 1,503.02. The rupee LKR= edged up to 112.90/113.10 per dollar from Tuesday's 113.10/113.20. It has fallen 3.85 percent in the past 12 months and hit a record low of 113.80/114.00 on Monday.
The central bank has allowed the rupee to depreciate on a gradual and limited basis since Oct. 30, after preventing a maximum possible appreciation of around 9 percent in the first half of the year due to high dollar inflows into the island nation.
"There was dull trade and a state bank, which usually represents the central bank, bought dollars at 113.00 level, directing the market," said one currency dealer.
The central bank on Tuesday said the government's exposure to foreign exchange risk has significantly declined, but analysts said the state was desperate for dollars after spending a third of its reserves to protect the rupee. [nLU274573]
The Columba All Share index lost 40.8 percent in the year due to poor earnings, high borrowing costs, global economic woes as well as a civil war between the Sri Lankan state and Tamil Tiger rebels, but has fared better than some of its regional rivals. [nSP235321].
"The market was a little optimistic after the government's stimulus package and confidence was restored by the central bank on a stability issue in a listed bank," said Shivantha Meepage, a research analyst at HNB Stockbrokers.
The central bank on Monday said it had decided to dissolve Seylan Bank's SEYB.CM board of directors with immediate effect to maintain the stability of the financial system. The move followed a liquidity crunch prompted by a credit card scandal at non-listed Golden Key Credit Card Company [nCOL416535].
Ceylinco Insurance CINS.CM, a company belonging to the same parent group of Seylan Bank, Ceylinco Consolidated, rose 6.86 percent to 187 rupees, while shares in Seylan Bank itself jumped 40.74 percent to 28.50 rupees.
Ceylinco Consolidated reported a credit card scandal last week in one of its non-listed companies. Analysts estimate the amount involved to be around 26 billion rupees ($228.8 million).
Market heavyweight and the country's No.1 fixed-line phone operator, Sri Lanka Telecom SLTL.CM, rose 3.33 percent to 31 rupees, as calculated on a weighted average.
Sri Lanka unveiled a 16 billion rupee stimulus package to cushion the economy from the reverberations of the global economic crisis, officials said on Wednesday. [nCOL385873]
Market turnover was 208.5 million rupees, more than half of last year's daily average of 400 million rupees. The bourse officials said the daily market turnover for 2008 was 464 million rupees.
Foreign inflows into the bourse have risen over 25 percent to a record high of 14 billion rupees this year, officials said.
Sri Lanka's annual inflation measured by consumer prices fell to an 18-month low of 14.4 percent in December, falling sixth straight month after hitting a record high in June, the government said on Wednesday.
The central bank governor said on Wednesday that interest rates will decline next year alongside falling inflation, while growth should hold at 6 percent with the help of government efforts to prop up the economy. [nCOL36357].
The interbank lending rate or call money rate CLIBOR edged up to 13.294 percent from Tuesday's 13.124 percent.
For secondary market rates, see <0#LKBMK=>.