Sri Lanka bourse steady at 1-1/2 year high after rate cut

COLOMBO: Sri Lankan shares rose for the seventh straight session to hit a 1-1/2 year high, led by blue chips, retail buying and foreign buying, boosted by rate cuts by the central bank to spur growth.
The central bank cut its key monetary policy rates by 50 basis points before the market opened, following some of its regional peers, to boost economic growth in the face of subdued demand.
Analysts had expected the central bank to keep policy on hold but predicted it could lower borrowing costs at its next meeting in June.
“The rate cut was good news for the market and the retail activities continued,” a stockbroker said.
The main stock index edged up 0.18 percent, or 11.29 points, to 6,250.00, the highest close since Nov. 11, 2011.
The market has gained 8.2 percent since Treasury Secretary P. B. Jayasundera and the central bank said interest rates could ease in May-June.
The rate cut came despite comments from the International Monetary Fund recently that Sri Lanka must not ease monetary conditions as inflation remained a concern, even though prices rose at a slower pace in April than the previous month.
Turnover was 1.47 billion rupees ($ 11.68 million), well above this year’s daily average of 1.03 billion rupees.
Foreign investors were net buyers of 285 million rupees of shares, extending the net foreign inflow so far this year to 9.6 billion rupees. Last year, the bourse saw a net inflow of $ 303 million.
The rupee edged down to 126.23/28 per dollar, down from Thursday’s close of 126.00/10, on importer demand for dollars, currency dealers said.