SL bleeds over Rs. 965 m in 2021’s first week

By the end of the first week of the new year, the Colombo Stock Exchange (CSE) had recorded a net foreign outflow (NFO) of Rs. 964.65 million, with Rs. 1.52 billion worth foreign sales being reported from the CSE against foreign purchases reported as Rs. 563.62 million during this period.  

However, domestic purchases exceeded domestic sales during the week, as domestic sales and purchases were recorded as Rs. 32.09 billion and Rs. 33.06 billion, respectively. 

Meanwhile, Treasury bills and bonds held by foreigners recorded NFOs of Rs. 0.75 million during this period, as bills and bonds depleted to Rs. 6,874.09 million from Rs. 6,874.84 million. 

The Sri Lankan Rupee (LKR) has depreciated by over 0.6% in the first week of this year, with the selling rate of a US Dollar (USD) reaching 190.89 on last Friday (8), from 189.80 on 1 January, according to data from the Central Bank of Sri Lanka. 

The LKR witnessed a depreciation of 3.29% in 2020, compared to an appreciation of 0.7% in the previous year. The rupee was at Rs. 189.18 to the USD as at 31 December 2020. The lowest value the rupee hit in 2020 was Rs. 200.4 against the US dollar, on 8 and 9 April. 

NFOs recorded from the equity and bond market in 2020 stood at about Rs. 148.44 billion as of 31 December, out of which Rs. 97.84 billion comprised NFOs from the Treasury bills and bonds held by foreigners, while the rest of the NFOs were from the CSE.

NFOs during this period were substantially higher than the Rs. 72 billion overall NFOs reported from 1 January-20 December 2019, during which period the Easter Sunday incident shook the country’s economy.

2020 marks the third consecutive year that the CSE is recording NFOs, as the last net foreign inflow CSE recorded was in 2017, which was Rs.17.65 billion. In 2018, NFOs reported from the CSE were Rs. 23.2 billion, which reduced by about 50% to Rs. 11.8 billion in 2019 amidst the Easter Sunday incident and the Presidential Election. 

However, in 2020, outflows intensified, with NFOs totalling Rs. 50.6 billion up to 31 December. Issuing a statement, the CSE stated that the net foreign outflow is largely in line with the foreign fund outflow trend recorded in emerging and frontier markets.