Sri Lanka rupee hovers near record low amid continued political uncertainty

Sri Lanka rupee hovers near record low amid continued political uncertainty

The Sri Lankan rupee closed steady on Friday, hovering near its all-time low hit in the previous session, as political uncertainty outweighed the positive impact of a policy rate hike, sources said.

Stocks closed weaker due to political uncertainty and the policy rate hike.

The parliament descended into chaos for a second day as lawmakers supporting newly appointed Prime Minister Mahinda Rajapaksa threw books, chili paste and water bottles at the Speaker to try to disrupt a second no-confidence motion. The vote went ahead anyway and for a second time lawmakers turned against Rajapaksa and his new government. It was not immediately clear if President Maithripala Sirisena will accept the vote and appoint a new government.

The central bank on Wednesday unexpectedly raised its key policy rates, in a move aimed at defending a faltering rupee as foreign capital outflows pick up amid an escalating political crisis and rising U.S. interest rates.

The rupee hit a fresh low of 176.80 per U.S. dollar on Thursday.

The currency ended at 176.60/80 per dollar on Friday, unchanged from the previous close. It has weakened more than 2.0 percent since the political crisis began on Oct. 26 and more than 15.1 percent so far this year.

Foreigners sold a net 55.5 million rupees worth stocks on Friday. They have offloaded equities worth 7.7 billion rupees since the political crisis started on Oct. 26.

The bond market saw outflows of about 21 billion rupees between Oct. 25 and Nov. 7, central bank data showed. This year, there have been 17.1 billion rupees of outflows from stocks and 110.8 billion rupees from government securities, bourse and central bank data showed.

The Colombo stock index fell 0.20 percent to 5,955.43 on Friday. It declined 0.39 percent this week after falling 1.9 percent last week. Heavy retail investor buying had lifted it 4.5 percent in the week before. It has slipped 6.5 percent so far this year.

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Stock market turnover was 346.6 million rupees ($1.96 million) on Friday, well below this year’s daily average of 840.6 million rupees.