October 4, 2019 / 3:02 PM / 13 days ago

Sri Lanka stocks recover, rupee steady ahead of key court decision

COLOMBO, Oct 4 (Reuters) - ** Sri Lanka’s stocks recovered on Friday from a more than 10-week closing low hit in the previous session, while the rupee finished steady ahead of a key court decision on the presidential frontrunner Gotabaya Rajapaksa.

** Investors were worried about political uncertainty after Sri Lanka’s appeal court set up a three-judge panel on Monday to hear a petition challenging the citizenship of presidential nominee Gotabaya Rajapaksa, which could have disqualified the former defence chief from the Nov. 16 election, stockbrokers said.

** After the market closed, Sri Lanka’s Appeal Court dismissed the legal case challenging Rajapaksa’s Sri Lankan citizenship, removing a major barrier he faced in contesting the Nov. 16 poll.

** The benchmark stock index ended 0.22% firmer at 5,689.90, rising from its lowest level since July 22 hit on Thursday. The bourse fell 1.42% this week. So far this year, the index has dropped 6%. ** The index had risen in a couple of sessions last week, after the central bank said on Sept 24 that the Monetary Board had ordered banks to reduce interest rates on all loans and advances by at least 200 basis points by Oct. 15. ** Equity market turnover was 558.7 million rupees ($3.08 million), less than this year’s daily average of about 657.2 million rupees. Last year’s daily average was 834.0 million rupees. ** Foreign investors were net sellers of 227.3 million rupees worth of shares on Friday, extending the year-to-date net foreign outflow to 3.1 billion rupees of equities, according to index data.

** Meanwhile the rupee ended steady at 181.35/50 per dollar compared with Thursday’s close of 181.30/70.

** The International Monetary Fund cut its forecast for Sri Lanka’s 2019 economic growth to 2.7% from 3.5%, as the Easter Sunday attacks on hotels and churches earlier this year dented tourism and broader business activity. ** Foreign investors bought government securities on a net basis for the first time in seven weeks, buying 522 million rupees worth of government securities. ** The foreign outflows, which are one of the major reasons behind the rupee’s recent weakness, may not abate until after a parliamentary election in 2020, some analysts said. ** The central bank does not release foreign trade numbers on a daily basis, but weekly data in the past four weeks has shown a steady outflow. ** Sri Lanka has seen a net foreign outflow of 54.8 billion rupees through Oct. 2, according to central bank data. ** For a report on global markets, click ** For a report on major currencies, click

$1 = 181.3500 Sri Lankan rupees Reporting by Shihar Aneez; Editing by Alex Richardson

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