COLOMBO, Sept 3 (Reuters) - Sri Lanka’s rupee closed weaker on Tuesday, hovering near a seven-month closing low hit last week, as continued foreign fund outflows from government securities after a surprise rate cut last month weighed on the currency. ** Foreign investors sold net 12.3 billion rupees worth of government securities in the week ended Aug. 28, the second worst weekly outflow in eight months. ** They offloaded government securities worth of 25.2 billion rupees in the two weeks ended on Aug. 28, data showed, extending the year-to-date net foreign outflow to 53.2 billion rupees, central bank data showed. ** A surprise rate cut on Aug. 23 has accelerated the outflow, currency dealers say. The central bank lowered rates for the second time in four months to boost sluggish growth after tourism and investments plummeted following deadly Easter Day bomb attacks by Islamist militants.
** The rupee ended 0.6% weaker at 180.10/30 per dollar, compared with Monday’s close of 179.75/85. The currency is up 1.4% this year.
** The rupee eased 1.5% in August as foreign investors sold government bonds in line with exit from other emerging markets.
** Central Bank Governor Indrajit Coomaraswamy after the policy rate cut on Aug. 23 said the bank was ready to cope with the outflow of total $700 million foreign funds invested in Sri Lankan government securities. Exit of some funds had resulted in some pressure on the local currency.
** The central bank in its monetary policy rate statement said the depreciation pressure was expected to be short-lived. ** Meanwhile, the main benchmark stock index ended 0.09% firmer at 5,883.42. It fell 0.15% last week and 0.8% in August.
** Sri Lankan investors have been mainly in a wait-and-see mode since the main opposition party named a hardline former defence chief as its presidential candidate.
** The market has been awaiting details of former defence chief Gotabaya Rajapaksa’s campaign as well as the identity of the ruling party’s presidential candidate, who has yet to be announced, dealers said.
** So far this year, the stock index has dropped about 2.7%.
** Equity market turnover was 799.1 million rupees ($4.44 million) on Tuesday, more than this year’s daily average of about 651.3 million rupees so far. Last year’s daily average was 834 million.
** Foreign investors sold a net 193.4 million rupees worth of shares on Tuesday, but they have sold a net 1.5 billion rupees worth of equities so far this year, according to index data.
** For a report on global markets, click
** For a report on major currencies, click ($1 = 179.8000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)