Sri Lankan money rates ease, stocks start slow

March 29, 2007 (LBO) – Sri Lankan money market rates eased further with more liquidity in the market and dealers saying they believe the rates should stabilize at lower levels and be less volatile. Thin trading was seen on the Colombo tock Exchange as it opened with brokers saying the market was likely to remain inactive as the holiday season gets under and most big players away from trading.

“The stock market is illiquid and we’re unlikely to see much activity because of the holiday season,” said Reshan Kurukulasuriya, Vice President, DFCC Stockbrokers.

Turnover was less than 10 million rupees in the first 40 minutes of trading

Dealers said call money rates came down further to around 13-14 percent.

“The market now has liquidity and should settle below 20 percent. We don’t expect much volatility,” said a dealer.

Dealers said the Central Bank has reportedly told the two state banks not to borrow at high levels as the market was “getting out of hand” with rates shooting up to the 40-50 percent levels. The rupee weakened further and was trading around 109.45 rupees to the dollar and likely to fall further to around 110 rupees after the new year.