* Cenbank says no more depreciation sets rupee at 113.50/90, from early trade 110.80/114.20
* Cenbank spends at least $60 mln to defend rupee-dealers
* T-bills at 16 month high; bond investors struggle to exit
(Reuters) – Sri Lanka’s rupee ended flat on Wednesday after the central bank reimposed a trading band of 113.50/90, 30 cents below early trading levels, while the benchmark 91-day treasury bill rates shot up 44 basis points to a 16-month high.
The rupee closed flat at 113.89/90 rupees a dollar from Tuesday’s close after it traded as high as 114.20 on the day, which was the upper end of the trading band set by the central bank at that point, traders said.
The central bank governor on Wednesday told Reuters the rupee will not be allowed to depreciate any further and the bank will keep the trading band at 113.50/90 for now.
Three currency dealers Reuters spoke to said the central bank paid at least $60 million on Wednesday to defend the currency at the new level amid depreciation pressure.
Dealers also said local and foreign investors tried to sell off rupee-denominated treasury bonds, but ran up against a lack of liquidity to cash out and buyers.
The 91-day T-bill hit a 16-month high of 7.95 percent at auction on Wednesday.
The stock market fell 0.42 percent or 25.59 points to6,035.36 as many investors stayed away, looking for positivesignals amid a credit crunch and margin calls.
Heavyweight John Keells Holdings PLC, which contributed to 9.5 percent of turnover, ended flat at 175
rupees, while No. 1 mobile phone operator Dialog Axiata PLC., which accounted 9.4 percent of the days turnover
closed flat at 7.80 rupees.
The plantation sector index edged up 0.35 percent in low volume after it fell 3.01 percent on Tuesday in reaction
to a budget proposal to redistribute 37,000 acres of unused state planting land to small farmers.
The day’s turnover was 603.9 million Sri Lanka rupees ($5.30 million), lowest since Nov. 16 and well below last year’s average of 2.4 billion and this year’s 2.4 billion. Average turnover in the last 10 sessions has been 822 million rupees.
Total volume was 38.7 million shares, against a five-day average of 50.7 million. The 30-day and 90-day average trading volumes were 55.1 million and 101.2 million. Last year’s daily average was 67.9 million.
The bourse has fallen 11 percent since Oct. 1 and it isAsia’s 10th-best performer with a year-to-date loss of 9.1
percent after being on the top for most of 2011, and giving the best returns in Asia in 2009 and 2010.
The bourse saw a net foreign outflow of 76.5 million rupees on Wednesday, and thus far in 2011, offshore investors have sold 17.3 billion, and a record 26.4 billion in 2010.
Losers outnumbered gainers by 108 to 67 on Wednesday, Thomson Reuters data showed.
FACTORS TO WATCH:
– If the central bank can maintain a narrow dollar trading
range
– Rupee depreciation due to heavy importer dollar demand
– Impact on the stock market due to acquisition bill
– Impact on the 2012 budget
DATA
Colombo Stock Exchange:
Stock Market Volume (Shares)
Current Volume Average Volume 30 Days
38,704,531 55,142,882
Yield and Price of Sri Lanka’s sovereign bonds:
Maturing year Tenure amount Reuters yield
2012 5-yr $500 mln 6.119-5.837
2014 5-yr $500 mln 5.141-4.808
2020 10-yr $1,000 mln 6.1374-5.9909
2021 10-yr $1,000 mln 6.1061-5.9694
* For Sri Lankan treasury securities benchmarks and data,
please click and
* For interbank lending rate or call money rate or
* For secondary market rates, please see.
($1 = 113.8700 Sri Lanka rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Bryson
Hull)
Reuters