By Shihar Aneez
COLOMBO, Nov 20 (Reuters) - Sri Lanka's stock exchange edged down on Thursday to its lowest close since February 2005, with gloomy economic and earnings outlooks keeping investor sentiment down.
The rupee closed flat at 110 to the dollar, supported by the central bank.
The Colombo All-Share index .CSE closed 0.33 percent or 5.74 points down at 1,711.78, its lowest close since Feb. 17, 2005. It is down 32.6 percent so far this year.
"Investors are quite cautious due to bleak local economic and corporate earning outlooks amid increasing interest rates," Shivantha Meepage, a research analyst at HNB Stockbrokers, said.
The trickle-down effect of recession in other parts of the world on Sri Lanka is also keeping sentiment low, he said.
The top conglomerate by market capitalisation, John Keells Holdings JKH.CM fell 0.65 percent to 65 rupees a share, calculated on a weighted average.
Traders said investors had offered to sell their shares in the company in response to the conglomerate's buyback plan that will buy one out of every 25 shares at 90 rupees.
Market heavyweight and Sri Lanka's top fixed-line phone operator Sri Lanka Telecom SLTL.CM fell 1.4 percent, while private lender Hatton National Bank HNB.CM closed 2.44 percent weaker at a near 2-year low of 80 rupees.
Shares in conglomerate Hayleys HAYL.CM fell 3.85 percent to 100 rupees, while fuel retailer Lanka IOC LIOC.CM, a subsidiary of Indian Oil Corporation IOC.BM fell 1.27 percent to 19.50 rupees.
Market turnover was 203.7 million rupees ($1.85), a half of last year's daily average of 400 million rupees.
The rupee LKR= closed unchanged as the central bank continuously supported it at 110 per dollar level.
"Still uncertainties are there on when the central bank will devalue the rupee again," said a currency dealer.
The central bank on Oct. 30 allowed limited depreciation of the rupee from 108 per dollar level it had been defending since mid-September.
The rupee fell 1.8 percent on that day, but the central bank again started protecting the currency at 110 by selling dollars through a state bank since then.
Traders and currency dealers say the central bank is facing pressure in supporting the rupee with a depleting reserve.
Currency dealers say the central bank will be forced to allow the rupee to depreciate in a controlled way, as it is using foreign currency reserves at an estimated rate of $20 million a day to support it currently.
However, central bank officials say the pressure on the exchange rate is seen easing and the foreign exchange currency reserve has is not yet under pressure.
Currency dealers and analysts estimate the reserve at $1.9 billion, while Central Bank Governor Ajith Nivard Cabraal last week said the reserve had hit $2.65 billion as of Oct. 11.
The interbank lending rate or call money rate CLIBOR edged down to 18.493 percent from Wednesday's close of 18.529 percent. For secondary market bond and bill rates, please see <0#LKBMK=>. (Editing by Bryson Hull)