June 19, 2019 / 11:50 AM / in a month

Sri Lanka stocks at more than 6-week high on foreign buying; rupee gains

COLOMBO, June 19 (Reuters) - Sri Lankan shares closed at a more than six-week high on Wednesday, boosted by foreign inflows into equities, while the rupee ended slightly firmer on dollar sales by exporters. ** The benchmark stock index ended 0.31% firmer at 5,392.30, its highest close since May 3. The bourse rose 1.61% last week, but has dropped 10.91% so far this year. ** Sri Lanka’s economy picked up to 3.7% in first quarter 2019, government data showed on Wednesday. ** 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. ** Wednesday’s stock market turnover was 542.01 million Sri Lankan rupees ($3.07 million), inline with this year’s daily average of about 550.6 million rupees. Last year’s daily average was 834 million rupees. ** Foreign investors bought a net 178.5 million rupees worth of shares on Wednesday, first net buying in eight sessions. They have sold a net 522.6 million rupees for the seven days through Tuesday. The year-to-date net foreign outflow is at 5.87 billion rupees. ** The rupee ended at 176.65/80 per dollar, compared with Tuesday’s close of 176.80/85, 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 3.39% 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.

** For a report on global markets, click ** For a report on major currencies, click ($1 = 176.5500 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Rashmi Aich)

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