The Sri Lankan rupee fell 19 percent in 2018, making it one of the worst performing currencies in Asia, as heavy foreign outflows from government securities weighed on the local currency, according to reports.
The rupee hit a record low for a seventh straight session on Monday on continued outflows of foreign funds mainly from government bonds as political uncertainty dented investor sentiment, Reuters reported.
The rupee hit an all-time low of 183.00 against the dollar in early trade, surpassing its previous record of 182.90 marked in the prior session, Refinitiv Eikon data showed. It has weakened about 5.4 percent since Sri Lanka’s political crisis began on Oct. 26, and lost 19 percent this year.
The rupee ended at 182.80/183.00 per dollar, compared with 182.75/183.25 in the previous session.
President Maithripala Sirisena appointed the cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremeinghe as prime minister, 51 days after he was sacked.
The political crisis was expected to ease, though uneasy relations between the two men could cause fiscal problems, analysts have said. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditures in 2019 and avert a government shutdown from Jan. 1.
Foreign investors have been net sellers of 13.3 billion rupees worth of stocks since the political crisis began. The bond market saw outflows of about 67.6 billion rupees ($370.21 million) between Oct. 25 and Dec. 26, central bank data showed.
This year, there have been 22.8 billion rupees of outflows from stocks, while government securities suffered a net 159.8 billion rupees of outflows through Dec. 26, the latest data from the bourse and central bank showed.
The Colombo stock index ended 0.62 percent firmer at 6,052.37 on Monday, but lost 5 percent for this year. Turnover was 288.5 million rupees, less than half of this year’s daily average of 834 million rupees.
Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.
Source: Reuters
-Agencies
