COLOMBO (Reuters) -- Sri Lanka's rupee closed flat on Friday amid increasing uncertainty over a $1.9 billion International Monetary Fund (IMF) loan, while shares rose to 6-month high on hopes of an end to a 25-year war.
The rupee fell to 117.80/118.00 a dollar initially due to U.S. comments on the IMF loan, before closing flat at 117.70/90.
U.S. Secretary of State Hillary Clinton said on Thursday the timing was wrong for the IMF to consider the loan.
“The market is now totally uncertain about the loan and expecting the worst,” said a currency dealer.
After the market closed, IMF director Dominique Strauss-Kahn said Sri Lanka needed the loan and a solution should be found in the coming weeks.
Central Bank Governor Ajith Nivard Cabraal on Friday told Reuters: “I don't think the IMF will mix economic affairs with political matters.” Analysts and traders say if Sri Lankan does not get the IMF bailout package, adverse impacts on interest rates, external debt repayment, rupee, and foreign investments are imminent.
Sri Lankan markets are worried about delays in the loand, which Britain and the United States have said could be used to punish Sri Lanka for not calling a truce in its civil war.
The rupee hit a record low of 120.80/121.10 on April 23, mainly on market expectations of a further fall in the rupee as part of conditions by the IMF for the loan.
Sri Lanka's government sought the loan from the global lender of last resort to help weather the financial storm and avert a balance of payment crisis.
The rupee has fallen around 8.32 percent since Oct. 30 and 4.07 percent so far this year, after the central bank allowed some depreciation to conserve dollars and help exporters.
The Colombo All-Share index .CSE rose 1.23 percent or 23.75 points to 1,907.67, its highest since Nov. 6.
“The war-end hopes have given confidence,” said Mohandas Thangarajah, a stockbroker at First Guardian Stockbrokers.
Sri Lanka's war, in which rebels are facing an imminent defeat, has signaled a military finish with troops advanced into the shrinking war zone on Friday to rescue all trapped civilians in the war zone in 48 hours. Shares in top conglomerate John Keells Holdings JKH.CM gained 3.61 percent to more than seven-month high of 79 rupees, on a weighted average, while top fixed-line phone operator Sri Lanka Telecom SLTL.CM rose 1.92 percent to 39.75 rupees.
Top mobile phone operator Dialog Telekom DIAL.CM, which on Thursday posted a 1.87 billion rupees loss in its first quarter, closed flat at 5.25 rupees a share.
Turnover was 420.2 million rupees ($3.57 million), less than the last year's daily average of 464 million rupees.
The interbank lending rate or call money rate CLIBOR edged up to 10.948 percent from Thursday's 10.753.
U.S. Secretary of State Hillary Clinton said on Thursday the timing was wrong for the IMF to consider the loan.
“The market is now totally uncertain about the loan and expecting the worst,” said a currency dealer.
After the market closed, IMF director Dominique Strauss-Kahn said Sri Lanka needed the loan and a solution should be found in the coming weeks.
Central Bank Governor Ajith Nivard Cabraal on Friday told Reuters: “I don't think the IMF will mix economic affairs with political matters.” Analysts and traders say if Sri Lankan does not get the IMF bailout package, adverse impacts on interest rates, external debt repayment, rupee, and foreign investments are imminent.
Sri Lankan markets are worried about delays in the loand, which Britain and the United States have said could be used to punish Sri Lanka for not calling a truce in its civil war.
The rupee hit a record low of 120.80/121.10 on April 23, mainly on market expectations of a further fall in the rupee as part of conditions by the IMF for the loan.
Sri Lanka's government sought the loan from the global lender of last resort to help weather the financial storm and avert a balance of payment crisis.
The rupee has fallen around 8.32 percent since Oct. 30 and 4.07 percent so far this year, after the central bank allowed some depreciation to conserve dollars and help exporters.
The Colombo All-Share index .CSE rose 1.23 percent or 23.75 points to 1,907.67, its highest since Nov. 6.
“The war-end hopes have given confidence,” said Mohandas Thangarajah, a stockbroker at First Guardian Stockbrokers.
Sri Lanka's war, in which rebels are facing an imminent defeat, has signaled a military finish with troops advanced into the shrinking war zone on Friday to rescue all trapped civilians in the war zone in 48 hours. Shares in top conglomerate John Keells Holdings JKH.CM gained 3.61 percent to more than seven-month high of 79 rupees, on a weighted average, while top fixed-line phone operator Sri Lanka Telecom SLTL.CM rose 1.92 percent to 39.75 rupees.
Top mobile phone operator Dialog Telekom DIAL.CM, which on Thursday posted a 1.87 billion rupees loss in its first quarter, closed flat at 5.25 rupees a share.
Turnover was 420.2 million rupees ($3.57 million), less than the last year's daily average of 464 million rupees.
The interbank lending rate or call money rate CLIBOR edged up to 10.948 percent from Thursday's 10.753.
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