November 26, 2018 / 12:47 PM / 17 days ago

Sri Lankan rupee hits record low on political uncertainty, economic woes

COLOMBO, Nov 26 (Reuters) - ** The Sri Lankan rupee hit a record low for a fourth straight session on Monday, as investors dumped currency-denominated assets following a credit rating downgrade and a delay in an IMF loan discussion in the wake of a political crisis.

** The rupee hit a fresh low of 180.40 per dollar on Monday, surpassing its previous low of 179.95 hit on Friday.

** Moody’s downgraded Sri Lanka on Tuesday for the first time since it started rating the country in 2010, blaming the political turmoil for aggravating its already problematic finances.

** The downgrade coincided with a decision by the International Monetary Fund to delay discussions on its loan tranche to Sri Lanka.

** The political standoff took another turn on Friday when the lawmakers who back the newly appointed prime minister, Mahinda Rajapaksa - who has refused to resign despite losing two confidence votes in parliament - walked out of the chamber in the face of another defeat there.

** The political paralysis remains the main concern of investors. While Rajapaksa and President Maithripala Sirisena have failed to win support in parliament for their new government, the deposed prime minister Ranil Wickremesinghe’s coalition, which claims it does have majority support in parliament, has not been allowed to try to form a government.

** The political impasse could be set to drag on longer after President Sirisena said on Sunday he would not reinstate Wickremesinghe as prime minister even if he was able to prove his majority in parliament.

** The central bank on Nov. 14 unexpectedly raised its main interest rates to defend the rupee, which has faltered as foreign capital outflows pick up due to the domestic crisis as well as rising U.S. interest rates.

** The rupee ended at 180.20/40 per dollar on Monday, compared with 179.90/180.40 in the previous session. It has weakened around 4 percent since the political crisis began on Oct. 26 and more than 17.3 percent so far this year.

** Foreigners bought a net 17.1 million rupees ($95,000) worth of stocks on Monday, but they have been net sellers of 7.9 billion rupees since the political crisis started on Oct. 26. The bond market saw outflows of about 29 billion rupees between Oct. 25 and Nov. 21, central bank data showed.

** This year, there have been 17.3 billion rupees of outflows from stocks and 118.8 billion rupees from government securities, the latest data from the bourse and central bank data showed.

** Five-year government bond yields rose about 45 basis points on Monday.

** The Colombo stock index rose 0.22 percent to 5,943.07 on Monday. It declined 0.41 percent last week following a 0.39 percent fall previous week. It has fallen 6.7 percent so far this year.

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** Stock market turnover was 736.7 million rupees on Monday, less than this year’s daily average of 835.3 million rupees. ($1 = 180.0000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

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