By: LekshmiSajeev
Sri Lankan shares extended falls into a fifth session on Wednesday (8) and closed at their lowest levels in six-and-a-half years on shattered investor confidence following the Easter Sunday bombings.
Investigators have dismantled a major part of the network linked to the Easter Sunday bombings, prime minister Ranil Wickremesinghe said on Tuesday (7), but warned the chance of further Islamist militant attacks could not be ruled out.
The benchmark stock index ended 0.18 per cent weaker on Wednesday at 5,372.97, its lowest close since Dec. 5, 2012.
Turnover was 222.3 million rupees ($1.27m), lower than this year’s daily average of 571.2 million rupees. Last year’s daily average was 834m rupees.
Foreign investors bought a net 60.2m rupees worth of shares on Wednesday, but they have been net sellers of 4.4 billion rupees worth of equities so far this year.
The rupee closed firmer for the second straight session on Wednesday on dollar selling by banks.
The rupee strengthened 1.1 per cent on Wednesday to close at 175.00/50 per dollar, compared with Monday’s (6) close of 176.90/177.10, market sources said.
Analysts expect it to weaken due to possible outflows from stocks and government securities.
The island’s currency lost one per cent last week, but is up 4.3 per cent this year as exporters converted dollars after investor confidence stabilised following the repayment of a $1bn sovereign bond in mid-January.
The rupee dropped 16 per cent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
Foreign investors sold a net 3.3bn rupees worth of government securities in the week ended April 30, extending the net foreign outflow to 10bn rupees from the securities so far this year, the latest central bank data showed.
The latest instability follows Sri Lanka’s plunge into political turmoil in October last year, when president Maithripala Sirisena abruptly removed prime minister and then dissolved parliament. A court later ruled the move unconstitutional, and Wickremesinghe was reinstalled as premier.
Investor sentiment took a big hit as a result of the 51-day political crisis, leading to credit rating downgrades and an outflow of foreign funds from government securities.
Reuters
