June 18, 2019 / 11:55 AM / a year ago

Sri Lanka stocks at 1-week low on foreign selling; rupee weakens

COLOMBO, June 18 (Reuters) - Sri Lankan shares dropped to a one-week low on Tuesday as foreign investors exited from the island nation’s risky assets, while the rupee ended weaker on dollar demand from importers. ** The benchmark stock index ended 0.17% weaker at 5,375.60, its lowest close since June 11. The bourse rose 1.61% last week, but has dropped 11.18% so far this year. ** Sri Lanka’s Finance Minister Mangala Samaraweera on Tuesday said the economy grew at 3.5% in the first quarter recovering from 1.8% in the previous quarter. ** The central bank cut its key interest rates on May 31 to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April.

** Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the bombings, junior finance minister Eran Wickramaratne told Reuters last month. A Reuters poll has forecast growth to slump to its lowest in nearly two decades this year. ** The government’s pension fund has resumed investing in risky assets as the stock market is “extremely undervalued at the moment and is considered a good time to go in”, the central bank governor said last month at its monetary policy meet. ** Tuesday’s stock market turnover was 1.1 billion rupees ($6.23 million), twice this year’s daily average of about 550.7 million rupees. Last year’s daily average was 834 million rupees. ** Foreign investors sold a net 106.3 million rupees worth of shares on Tuesday, extending the net foreign outflow for the past seven days to 522.6 million rupees. The year-to-date net foreign outflow now stands at 6.04 billion rupees. ** The rupee ended at 176.80/85 per dollar, compared with Monday’s close of 176.75/85, market sources said. ** Analysts expect the rupee to weaken further as money flows out of stocks and government securities. ** The rupee fell 0.14% last week, but is up 3.28% for the year. Exporters had converted dollars as investors’ confidence stabilised after a $1 billion sovereign bond was repaid in mid-January. ** The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. ** Foreign investors bought a net 311 million rupees worth of government securities in the week ended June 12, but the island nation’s net foreign outflow was at 21.6 billion rupees so far this year, central bank data showed.

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$1 = 176.7000 Sri Lankan rupees Reporting by Ranga Sirilal, Editing by Sherry Jacob-Phillips

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