COLOMBO: Sri Lanka's rupee ended over 1 percent firmer on Friday, posting a weekly gain of 2.8 percent, as foreign investors purchased government securities after an IMF statement and government's $1 billion debt repayment boosted confidence.
The rupee closed at 176.60/177.00 per dollar, compared with Thursday's close of 178.40/60, market sources said.
The currency has appreciated 3.4 percent so far this year.
Investor confidence in Sri Lanka is stabilising after the country repaid a $1 billion sovereign bond in mid-January, Central Bank of Sri Lanka Governor Indrajit Coomaraswamy told Reuters on Monday.
Worries over heavy debt repayment after a 51-day political crisis that resulted in a series of credit rating downgrades
dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first three months.
The International Monetary Fund (IMF) on Jan. 16 said it would resume discussions in February for further disbursal of part of a $1.5 billion loan. Fitch Solutions Macro Research, a subsidiary under Fitch Group on Thursday downgraded its average forecast for the rupee to 186.00 per US dollar for this year and 192.00 in the next year, from 177.00 and 183.00 respectively.
"It expected the rupee to continue weakening over the short term due to a worsening terms of trade, although the pace of depreciation is likely to ease from what was seen during the 2018, constitutional crisis.
The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. The political crisis had dented investor sentiment and delayed Sri Lanka's borrowing plans. Sri Lanka was plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. Wickremesinghe was later reinstalled as premier. A court ruled the move was unconstitutional.
The Colombo Stock Index ended 0.13 percent weaker at 5,982.05 on Friday. The bourse rose 0.06 percent for the week, but declined 1.03 percent in January. Turnover was 810.6 million rupees ($4.59 million), less than last year's daily average of 834 million rupees.
Foreign investors net sold 82.5 million rupees worth shares on Thursday. They have been net sellers of 2.3 billion rupees worth of stocks so far this year and 15.7 billion rupees since the political crisis began on Oct. 26, 2018.
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