COLOMBO: The Sri Lankan rupee closed stronger on Thursday due to dollar inflows from inward remittances ahead of the traditional new year celebrations, market sources said, while stocks snapped an eight-session losing streak to end higher.
The currency extended gains into a third session to end firmer at 176.10/25 to the dollar, up from Wednesday's close of 176.20/40.
The rupee has climbed 1.1 percent so far this week and 3.7 percent this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence after the country repaid a $1 billion sovereign bond in mid-January.
Dealers expect pressure on the currency to ease with more inward remittances ahead of the traditional Sinhala-Hindu New Year on April 14.
Sri Lanka was plunged into political turmoil in October when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move was unconstitutional, and Wickremesinghe was reinstalled as premier.
Investor sentiment took a big hit as a result of the 51-day political crisis, leading to credit rating downgrades and an outflow of foreign funds from government securities.
The island nation 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 rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
Foreign investors bought a net 3.5 billion rupees worth of government securities in the week ended March 19, the third net inflow in five weeks, turning year-to-date net foreign buying to 1.8 billion rupees, the latest central bank data showed.
The Colombo Stock Exchange index ended 0.81 percent firmer at 5,556.28 on Thursday, edging up from their lowest since Dec. 18, 2012, hit in the previous session.
The benchmark stock index slipped 1.36 percent last week, recording its seventh consecutive weekly drop. The index has declined 8.2 percent so far this year.
The market awaits for some positive news from the third and final vote on the 2019 budget scheduled for April 5, market sources said.
Turnover was 457.8 million rupees ($2.60 million), less than this year's daily average of 656.6 million rupees. Last year's daily average came in at 834 million rupees.
Foreign investors sold a net 46.8 million rupees worth of shares on Thursday, extending the year-to-date foreign outflows to 6.21 billion rupees worth of equities so far this year.
The latest budget aims to increase government spending by 13 percent in 2019, during which the presidential election must be held, while it has set an ambitious goal to reduce a large fiscal deficit.
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