October 30, 2018 / 12:54 PM / in 17 days

Sri Lankan rupee hits record low as political turmoil mounts

COLOMBO, Oct 30 (Reuters) - ** The Sri Lankan rupee slumped to a record low on Tuesday as escalating political turmoil sparked buying of U.S. dollars by importers. Stocks climbed for a third straight session to hit a nearly six-week closing high on retail investor buying, but foreign investors exited after President Maithripala Sirisena sacked the prime minister unexpectedly and swore in the ex-president.

** The rupee dropped to a record low of 174.75 per dollar on Tuesday, surpassing the previous record low of 174.30 hit on Monday. ** The rupee ended at 174.60/80 per dollar on Tuesday, compared with previous close of 173.75/90. ** The rupee weakened 3 percent so far this month after a 4.7 percent drop in September against the dollar. It dropped 13.5 percent so far this year.

** Sri Lankan opposition leader Mahinda Rajapaksa was appointed prime minister on Friday after President Sirisena dismissed the incumbent in a surprise move that threatens political turmoil in the South Asian country. As president, the pro-China Rajapaksa ushered in billions of dollars of investment from Beijing to help rebuild the country following the end of a 26-year-long civil war against Tamil separatists in 2009. ** The Colombo stock index ended 0.34 percent firmer at 5,964.32, its highest close since Sept. 19. The bourse shed 3.6 percent last month, and slipped 6.4 percent so far this year.

** Analysts said retail investors, who have stayed away from the market during a number of investigations against market manipulation that allegedly occurred under the previous government, actively bargain-hunted after the president’s announcement. ** For a report on global markets, click here and for a report on major currencies, click ** Data from the central bank showed that foreign investors sold government securities worth a net 3.3 billion rupees ($30.7 million) in the week ended Oct. 17. Sri Lanka has seen a net outflow of 85.9 billion rupees in securities so far this year. ** Stock market turnover was 981.4 million rupees ($5.64 million) on Tuesday, more than this year’s daily average of 786.4 million rupees. ** Foreign investors were net sellers of shares worth 155.3 million rupees on Tuesday, extending the year-to-date net foreign outflow to 12.7 billion rupees worth of equities.

$1 = 174.1000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips

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