January 14, 2019 / 12:01 PM / 5 days ago

Sri Lanka rupee ends weaker in dull trade

COLOMBO, Jan 14 (Reuters) - ** Sri Lanka’s rupee closed weaker on Monday in thin trade due to dollar demand from banks and importers, while political uncertainty also dented investor sentiment. ** Sri Lankan shares recovered from a more than six-week closing low hit on Friday to close slightly higher, driven by consumer staples and financials. ** The Colombo Stock Index ended 0.23 percent firmer at 5,981.02, edging up from its lowest close since Nov. 26 hit on Friday. The benchmark stock index lost 5 percent in 2018. ** Turnover was 1.5 billion rupees ($8.24 million), well above last year’s daily average of 834 million rupees. ** Foreign investors sold a net 418.9 million rupees worth of shares on Monday. They have been net sellers of 14.6 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 77.9 billion rupees between Oct. 25 and Jan. 9, the latest central bank data showed. ** Foreign investors pulled a net 22.8 billion rupees out of stocks last year, while they net sold 159.8 billion rupees from government securities from January through Dec. 26, bourse and central bank showed data. ** The rupee, which traded 182.25 per dollar during the day, ended at 182.15/30 per dollar on Monday, compared with 181.90/182.00 in the previous session, market sources said. On Jan.3, 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, according to Refinitiv data, due to heavy foreign outflows. ** The rupee has declined about 5 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 and maintain a competitive exchange rate and support the rebalancing of the current account, thereby supporting a gradual build-up of reserves. ** The central bank on Wednesday said that the Reserve Bank of India (RBI) had agreed to provide $400 million to it under a regional swap facility and it had also requested a further bilateral swap arrangements of $1 billion. ** Sri Lanka 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. ** For a report on global markets, click here. ** For a report on major currencies, click ($1 = 182.1000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

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