March 14, 2019 / 12:05 PM / 7 months ago

Sri Lanka shares recover from 5-1/2-year low, rupee firms

COLOMBO, March 14 (Reuters) - Sri Lankan shares recovered from a 5-1/2-year low on Thursday on bargain hunting after four straight sessions of losses, but concerns over economic and political stability kept the gains in check. ** Parliament late on Tuesday passed the second reading of the 2019 budget that raises spending while setting an ambitious goal to reduce the country’s large fiscal deficit. The final vote is scheduled for April 5. ** Prime Minister Ranil Wickremesinghe-led government’s political stability has been questioned by the opposition since he was reinstated as prime minister after a 51-day political crisis. ** The Colombo Stock Exchange index rose 0.46 percent to 5,632.79, pulling back from its lowest close since Sept. 9, 2013. ** The benchmark stock index had fallen 1.63 percent last week, recording its third straight weekly fall. It declined 2.9 percent in February, its second straight monthly fall. ** The turnover was 677.7 million rupees ($3.79 million), less than last year’s daily average of 834 million rupees. ** Foreign investors sold a net 18.9 million rupees worth of shares on Thursday, taking the year-to-date net foreign outflow to 5.95 billion rupees worth of equities so far this year. ** The rupee snapped a three-session losing streak, ending at 178.75/85 per dollar in lacklustre trade, compared to Wednesday’s close of 178.80/90. Inflows from a sale of $2.4 billion sovereign bonds were expected to boost the rupee. ** The sale is crucial for the island nation to boost investor sentiment, which was dented by rating downgrades by all three rating agencies after the political crisis in October. ** The rupee has climbed 2.2 percent 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. ** Worries over heavy debt repayment after the 51-day political crisis that resulted in a series of credit-rating downgrades dented investor sentiment as the country struggled to repay its foreign loans. ** The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. ** Foreign investors bought a net 636.3 million rupees worth of government securities in the week ended March 6, the first net inflow in three weeks, but they have sold a net 2.8 billion rupees so far this year, the central bank’s latest data showed. ** For a report on global markets, click ** For a report on major currencies, click ($1 = 178.8000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Shreejay Sinha)

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