October 20, 2018 (LBO) – Net foreign outflows from Sri Lanka’s stock/bond markets continued at a brisk pace this past week. The government securities market saw outflows of Rs5.3bn, while the stock market saw outflows of Rs2.3bn for the week. Stock market outflows were exacerbated by a Rs1.4bn foreign sale of Singer Sri Lanka (SINS).
Year to date outflows from both markets are approaching the Rs100bn (US$570mn) mark. These outflows have been a serious factor in that 10% depreciation in the LKR to date. The Sri Lanka rupee sits at an all time low of Rs171 to the dollar.
On a positive note, this week the CBSL was able to secure a US$1bn loan from China. The loan, obtained on attractive terms according to the CBSL, will certainly bolster Sri Lanka’s foreign reserves. Chinese and IMF support for Sri Lanka’s balance of payments may steady Sri Lanka’s shaky foreign reserve position and currency.