S.Lanka rupee edges down as trade dries, shares flat

By Shihar Aneez

COLOMBO, Dec 18 (Reuters) - Sri Lanka's rupee edged down on
Thursday in thin volumes of trade as most corporate traders
were on holiday ahead of festive season, dealers said.

Shares ended flat, but analysts said worries on economic
and earnings outlook remained, with most investors staying
away.

The rupee ended at 111.85/95 per dollar, weaker than
Wednesday's close of 111.80/85.

Traders said inflows from worker remittances have kept the
rupee stable in the last two sessions in the absence of central
bank intervention after it hit a 14-month low on Tuesday.

It touched 112.00 on Tuesday, when the central bank allowed
gradual depreciation of the rupee for a fifth straight day. It
had fallen around 1.7 percent in the five days up until
Tuesday.

On Wednesday, dealers and traders said the market was
concerned about a pending oil hedging deal that could leave the
foreign exchange market with low dollar liquidity as five banks
involved would not be paid on time due to a court ruling.

The court has suspended hedging payments to the banks after
several parties sued over the deal, which could cost the
government hundreds of millions of dollars since it bet on oil
prices rising to $200 a barrel.

They since have fallen nearly 70 percent from a peak of
$147.

The Colombo All-Share index .CSE barely changed, edging
up 0.05 percent or 0.75 points to 1,526.27. On Tuesday, the
bourse hit its lowest close since Jan. 4, 2005.

The bourse is still down around 40 percent so far this year
due to poor corporate earnings, high borrowing costs and global
woes.

"The sentiment is still negative and the turnover is mainly
because some investors are quitting the market by selling their
stakes," said Mohandas Thangarajah, a stockbroker at First
Guardian Equities.

Analysts said they hardly saw any impact because of a
sovereign rating downgrade by Standard & Poor's Ratings
Services (S&P).

S&P on Monday lowered Sri Lanka's sovereign rating from
B-plus to B, five notches below investment grade on declining
foreign currency reserves and a high fiscal deficit, but
central bank disputed the rating agency's claim as 'factually
incorrect.' See [ID:nCOL55007].

Sri Lanka's top fixed-line phone operator Sri Lanka Telecom
SLTL.CM rose 0.81 percent to 31.25 rupees, calculated on a
weighted average, while top private lender Commercial Bank of
Ceylon COMB.CM closed 0.74 percent firmer at 68.50 rupees.

Shares in Hatton National Bank HNB.CM rose 3.42 percent
at 68 rupees in thin trade.

Top conglomerate John Keells Holdings JKH.CM fell 3.51
percent to over 4-½ year closing low of 55 rupees, while tyre
manufacturer Kelani Tyres TYRE.CM, which accounted for 55
percent of the day's turnover, shed 1.06 percent to 23.25
rupees.

The market turnover of 81.4 million rupees ($0.73 million),
around a fifth of last year's daily average of 400 million
rupees. It hit a seven-year low of 13.1 million rupees on Dec.
4.
The interbank lending rate or call money rate CLIBOR edged
down to 13.366 percent from Wednesday's close of 13.817
percent.

For secondary market bond and bill rates, please see
<0#LKBMK=>.