May 8, 2019 / 12:42 PM / 2 months ago

Sri Lanka stocks hover near 6-1/2-year closing low; rupee up

COLOMBO, May 8 (Reuters) - Sri Lankan shares extended falls into a fifth session on Wednesday 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, but warned the chance of further Islamist militant attacks could not be ruled out. ** The benchmark stock index ended 0.18 percent weaker on Wednesday at 5,372.97, its lowest close since Dec. 5, 2012. ** Turnover was 222.3 million rupees ($1.27 million), lower than this year’s daily average of 571.2 million rupees. Last year’s daily average was 834 million rupees. ** Foreign investors bought a net 60.2 million 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 percent on Wednesday to close at 175.00/50 per dollar, compared with Monday’s 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 1 percent last week, but is up 4.3 percent this year as exporters converted dollars after investor confidence stabilised following the repayment of a $1 billion sovereign bond in mid-January. ** The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. ** Foreign investors sold a net 3.3 billion rupees worth of government securities in the week ended April 30, extending the net foreign outflow to 10 billion 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 Ranil Wickremesinghe 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. ** For a report on global markets, click ** For a report on major currencies, click ($1 = 174.4000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

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