August 21, 2009 / 11:45 AM / 10 years ago

Sri Lanka cbank buys up $900 mln on U.S. fund inflow

COLOMBO, Aug 22 (Reuters) - Sri Lanka's central bank on Friday said it has absorbed $900 million this week to keep the rupee LKR= steady and prevent appreciation, the bulk of it coming from a U.S. fund's purchase of long-tenure T-bonds.

The rupee closed flat at 114.77/82 a dollar for a fourth straight day.

K.D. Ranasinghe, director at the central bank’s economic research department, said the central bank through Thursday had absorbed $894 million this week.

“Today, the purchase should be around $10 million,” Nandalal Weerasinghe, assistant governor at the central bank, told Reuters.

The central bank on Thursday said the largest post-war investment — more than $875 million purchase of four- and six-year treasury bonds — helped boost foreign exchange reserves by more than a third to over $3 billion. [ID:nCOL428771]

Currency traders said the influx put upward pressure on the rupee, but the central bank said it would absorb all inflows via government securities to keep it from rising from its present rate of 114.80 and hurting exporters. [ID:nCOL515170]

The all-share index .CSE closed 0.07 percent or 1.7 points weaker at 2,522.92. It hit 14-month high close on Tuesday.

“Investors are waiting cautiously for a turn around in the economy,” said Amali Perera, a research analyst at Asha Phillip Securities. “Retailers moved the market on Environmental Resources GREG.CM shares after rights and warrant issues.”

Environmental Resources closed up 7.04 percent at 38 rupees.

The company on Thursday offered existing shareholders the right to buy three shares for every one held at 20 rupees each, and also issued one-year and two-year warrants at 14 and 16 rupees respectively.

Shares in conglomerate Bukit Darah BUKI.CM closed 2.3 percent weaker at 1,513.25 rupees a share, calculated on a weighted average while top fixed-line phone operator Sri Lanka Telecom SLTL.CM closed 1.1 percent weaker at 42.00 rupees.

The bourse is still up 67.9 percent so far this year and is one of Asia’s best-performing markets. It has surged 32.3 percent since the government declared victory in the war on May 18.

Turnover was 514.61 million Sri Lankan rupees ($4.48 million), more than last year’s daily average of 464 million.

Sri Lanka’s parliament on Thursday amended the island nation’s securities law to allow trading in derivatives, options, and futures. [ID:nCOL487671]

The interbank lending rate or call money rate CLIBOR fell to 9.454 percent from Thursday’s 9.591 percent.

For secondary market rates, please see <0#LKBMK=>. ($1=114.80 Sri Lankan Rupee) (Editing by Bryson Hull)

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