FTSE recovers Brexit losses, Brent crude down 1.2-pct

June 30 (LBO) – Asia stocks rose across the board on Thursday, tracking an overnight rally on Wall Street, while the safe-haven Japanese yen stopped rising as global markets bet Brexit won’t get implemented immediately.

Michael Hewson, chief market analyst at CMC Markets, said investors had been reassured by hopes that Britain’s EU exit wouldn’t happen immediately, meaning the status quo was unlikely to change in the short term, BBC reported.

“Whilst that doesn’t remove the uncertainty with respect to the eventual outcome, it also means that markets are going to have plenty of time to settle into their new-found reality and equilibrium,” he said.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.3 percent, pulling further away from a one-month low on Friday when it plunged more than 3 percent in reaction to Britain’s decision to leave the European Union. The index was on track to end the April-June quarter down about 1 percent.

Japan’s Nikkei climbed 0.8 percent.

Following the market’s initial panic over Brexit, “it doesn’t look like it is spreading to a financial crisis or something serious, at least at this moment,” said Hikaru Sato, senior technical analyst at Daiwa Securities in Tokyo.

Overnight, the Dow rose 1.6 percent while Britain’s FTSE rallied for the second day, letting the London benchmark retrace all of its losses right after the Brexit vote, Reuters reported. The FTSE 100 was up 3.58 percent.

U.S. President Barack Obama said on Wednesday he expects the world economy will be steady in the short run after Britain’s decision but expressed concern about longer-term global growth.

Still, expectations that major central banks will ease monetary policy in the wake of Brexit have buoyed risk assets globally.

Analysts also saw the recent plunge in sovereign debt yields as a factor driving investors to equities.

“While the full consequences of Brexit are still uncertain, the one thing it has accomplished very successfully is dropping global bond yields to new lows and keeping global monetary policy looser for longer,” wrote Angus Nicholson, market analyst at IG in Melbourne.

“Negative yielding government debt has surged… in such a situation, the drive for yield has never been stronger, which has seen people piling into dip-buying with little thought for the fundamental picture.”

German and Japanese benchmark 10-year government debt yields have both fallen to historic lows below zero over the past week. Irish, French and Dutch 10-year yields declined to record troughs on Wednesday, all approaching zero.

The 30-year U.S. Treasury yield, while still positive, has approached record lows as well.

In currencies, the battered sterling came off multi-decade lows. The pound was last traded at $1.3403, putting further distance between a 31-year trough of $1.3122 touched on Monday. It has still lost more than 6 percent in the quarter.

The euro, another casualty in the days after Brexit, fetched$1.1110 after reaching $1.0912 on Friday, its lowest since March.

The yen was on the defensive as risk aversion eased. The dollar was little changed at 102.650 yen after sliding to 99.00 on Friday, a trough last seen in November 2013. For the quarter, the greenback was headed for an 8 percent drop against the yen.

Precious metals rose in part due to a weaker dollar, although the gains also highlighted underlying investor appetite for safe assets amid longer-term financial uncertainty after Brexit.

Silver hovered near a 1-1/2-year high touched Wednesday, while platinum and palladium stood tall after rallying more than 3 percent overnight. Spot gold was nearly flat at $1,316.06 an ounce after rising modestly on Wednesday.

Crude oil prices retraced some of their gains from Wednesday’s sharp rally as fears over strike outages in Norway abated. Brent crude was down 1.2 percent at $50.02 a barrel after jumping more than 4 percent overnight, thanks to a larger-than-expected drawdown in U.S. crude inventories.

Oil has mostly recovered what it lost after the Brexit shock. For the quarter, Brent has risen 26 percent on hopes that declining production in some countries would ease a global glut.

 

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Sri Lanka's social security programs to be networked: Cabinet

June 30, 2016 (LBO) – Sri Lanka’s Cabinet has approved the Social Security Network Project to connect all social security programs, so that suitable persons have access to social security in a transparent manner.

“There is no method of identifying whether the benefits of social security programs are being directed to the suitable communities,” a statement said.

This is because there is no connection between various social security programs.

The proposal made by Prime Minister Ranil Wickremesinghe, in his capacity as the Minister of National Policies and Economic Affairs, was approved by the Sri Lanka’s cabinet.

 

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Sri Lankan rupee 1-wk forwards rise on bank dollar sales; stocks up

June 30 (Reuters) – Sri Lankan rupee one-week forwards rose on Thursday as a state-run bank sold dollars after the central bank intervened to lift the rupee, while dollar selling by a few exporters also helped the currency gain, dealers said.

One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee, were at 146.40/50 per dollar at 0527 GMT, firmer than Wednesday’s close of 146.60/80. “A state bank is selling dollars.

It looks like the central banks is trying to keep the rupee steady because it is the end of the quarter,” said a currency dealer, requesting not to be named.

Dealers said the move could help the government show that the currency had really not depreciated in the given quarter. Officials from the central bank were not available for comments.

Dealers said the three-day dollar/rupee forwards, known as spot next, did not trade. It ended at 146.50/70 per dollar on Wednesday, compared with Tuesday’s close of 147.65/85.

Spot next, which has acted as a proxy for the spot currency since January, indicates the exchange rate for the day following conventional spot settlement.

For Thursday’s trade, the spot next settlement takes place five days ahead due to the intervening weekend.

 

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Charitha Ratwatte to take up Governor position for two months: Source

June 30, 2016 (LBO) – Charitha Ratwatte is expected to take a temporary position as the Governor of the Central Bank of Sri Lanka, a government source told Lanka Business Online.

The appointment of the former Treasury Secretary would be for two months, the source added. An official announcement has not been made yet.

On Wednesday, Sri Lanka’s President Maithripala Sirisena stated a new appointment would be made soon, after Governor Arjuna Mahendran said he won’t seek re-appointment until an investigation into bond auctions last year were completed by COPE.

 

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NAWALOKA HOSPITALS - DIVIDEND ANNOUNCEMENT

NAWALOKA HOSPITALS PLC
Company ID: - NHL
Date of Announcement: - 30.Jun.2016
Rate of Dividend: - Rs. 0.08 per share / Interim Dividend
Financial Year: - 2016/2017
XD: - 12.Jul.2016
Payment: - 22.Jul.2016
Share Transfer Book Open

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Sri Lankan rupee forwards rise as foreign investors buy bonds

June 29 (Reuters) – Sri Lankan rupee one-week forwards strengthened on Wednesday as foreign investors sold dollars to buy local bonds, while selling of the greenback by some exporters and banks also supported sentiment.

Asian stock markets joined a global rebound as the immediate drag from the Brexit vote began to ebb and investors wagered central banks would ultimately ride to the rescue with more stimulus measures.

One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee, were at 147.50/60 per dollar at 0555 GMT, compared with Tuesday’s close of 147.80/148.00.

“Foreigners are selling dollars,” said a currency dealer requesting not to be named.

He said it could be for local bond buying.

Dealers said the three-day dollar/rupee forwards were not allowed to trade ahead of the quarter-end.

The forwards, known as spot next, ended at 147.65/85 per dollar on Tuesday, compared with Monday’s close of 148.05/25.

Spot next, which has acted as proxy for the spot currency since January, indicates the exchange rate for the day following conventional spot settlement.

For Wednesday’s trade, the spot next settlement takes place five days ahead due to the intervening weekend.

The Sri Lankan stock index was 0.26 percent down at 6,291.26 as of 0604 GMT, on a turnover of 224.5 million rupees ($1.53 million). ($1 = 147.1000 Sri Lankan rupees)

 

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Sri Lanka President to appoint new Governor

June 29, 2016 (LBO) – Sri Lanka’s President Maithripala Sirisena will appoint a new governor to the Central Bank soon, he said on Wednesday.

“I will appoint a new Governor to the Central Bank in the coming hours,” his twitter account said.

Governor Arjuna Mahendran has said he won’t seek re-appointment due at the end of this month until a COPE report on bond investigations is finalized.

COPE will meet today to consider the Auditor General’s report on the bond investigation.

Parliamentarian and COPE member Dr. Nalinda Jayatissa told LBO the committee will most probably arrive at a decision on the alleged bond scam based on the findings of the Auditor General’s report.

“Based on those reports, we may take a decision tomorrow, but appointing Governor again or not is a decision that should be taken by the President himself,” Jayatissa said.

President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe met central bank officials in the afternoon, and the Wickremesinghe told reporters the meeting was about the economy.

Officials tipped for the position of new governor include Dinesh Weerakkody, Nandalal Weerasinghe, P. Samanasiri, and Deputy Minister Eran Wickremeratne.

 

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Central Bank Union calls for immediate action

Jun 29, 2016 (LBO) – Sri Lanka’s Central Bank Executive Officers Union says that immediate legitimate action needs to be taken to prevent probable anarchic state that would arise at the institution from July 01, 2016.

“We write to record our discontent on the current state of depletion of public confidence in and heightened criticism of Central Bank of Sri Lanka at all levels and draw the attention of the members of the Monetary Board to possible anarchical situation that would arise on the affairs of the bank from July 01, 2016,” Central Bank Executive Officers Union said in a statement.

“If a qualified and recognized person with outstanding competence and unquestioned integrity is not appointed with effect from July 01, 2016 in conformity with the provisions of the Monetary Law Act (MLA) and intent of such provision.”

According to the Exter report the Governor should be a man of recognized and outstanding competence in and understanding of the economic and financial problems of Ceylon and of unquestioned integrity and responsibility.

The statement further says that with regard to the acting arrangement of the governor, section 8 (3) and section 24 of the MLA stipulates the following:

8(3) – “In the absence of the governor any meeting of the monetary board, the deputy governor designated as senior by the board shall act as his alternate and shall preside at the meeting and have the right to vote the threat,”

24 – “In the event of the temporary absence from duty of the governor or of the temporary inability of the governor to perform his functions and duties, the deputy governor designated as senior by the board shall act as the chief executive officer of the Central bank and shall have authority to excruciate the powers and perform the functions and duties of the governor under this act.”

It is clear that from the above sections that the senior deputy governor only in a situation where the governor appointed in terms of section 12 of MLA is temporary unable to attend to duties and functions as the chairman of the monetary board and as the CEO of the bank.

In other words if the governor position is vacant, acting arrangement for the position cannot be made, the statement stressed.

Central Bank Governor Arjuna Mahendran has informed the Monetary Board that he will not seek a re-appointment when his term ends this month until a parliamentary probe over bond sales is complete.

Meanwhile, Sri Lanka’s Parliament appointed Committee on Public Enterprises (COPE) will meet Wednesday to consider the Auditor General’s report on the bond investigation.

Parliamentarian and COPE member Dr. Nalinda Jayatissa told LBO earlier, the committee will most probably arrive at a decision on the alleged bond scam based on the findings of the Auditor General’s report.

However, analysts say that appointing Governor again or not is a decision that should be taken by the President himself.

Mahendran had become the 13th governor of the central bank. He is the second non-Sri Lankan to hold the office after John Exter, a US citizen who was the founding governor.

 

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Sri Lanka *market update* President arrives at Central Bank

President Maithripala Sirisena arrived at the Central Bank short while ago, reports said. He tweeted that an announcement on the new Governor will be made soon. Sources say Nandalal Weerasinghe, deputy governor, Dinesh Weerakkody, P Samarasiri, Eran Wickremeratne, considered for position.

COPE has accepted the Auditor General’s report on the Treasury bond transactions last year, and will meet central bank and finance ministry officials July 7 to discuss it, a media report said.

 

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BANSEI ROYAL RESORTS HIKKADUWA - DIVIDEND ANNOUNCEMENT

BANSEI ROYAL RESORTS HIKKADUWA PLC
Company ID: - BRR
Date of Announcement: - 29.Jun.2016
Rate of Dividend: - Rs. 0.10 per share / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 16.Aug.2016
XD: - 18.Aug.2016
Payment: - 26.Aug.2016
Share Transfer Book Open

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CENTRAL INDUSTRIES (CIND) - SUB-DIVISION OF SHARES 2 for 1

http://www.cse.lk/cmt/upload_cse_announcements/9991467201593_.pdf

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Brexit vote, UK political confusion keep world and asian markets on edge

June 28 (Reuters) – Britain’s vote to leave the European Union continued to reverberate through financial markets, with the pound falling to its lowest level in 31 years, despite government attempts to relieve some of the confusion about the political and economic outlook.

UK finance minister George Osborne said early Monday that the British economy was strong enough to cope with the market volatility caused by last week’s “Brexit” referendum which has resulted in the biggest blow since World War Two to the European goal of forging greater unity.

“Our economy is about as strong as it could be to confront the challenge our country now faces,” Osborne told reporters.

“It is inevitable after Thursday’s vote that Britain’s economy is going to have to adjust to the new situation we find ourselves in,” said Osborne, who later ruled himself out of the running to succeed David Cameron as prime minister.

Boris Johnson, a leading proponent of Brexit and the frontrunner to be the next prime minister, praised Osborne for saying “some reassuring things to the markets”.

The former London mayor said it was now clear that “people’s pensions are safe, the pound is stable, markets are stable. I think that is all very good news.”

But neither Osborne’s nor Johnson’s words failed to stop the slide in stocks on world markets which began last Friday when Britons confounded investors’ expectations by voting to end 43 years of EU membership.

European bank shares had their worst two-day fall on record and world stocks as measured by MSCI index saw their worst two-day fall since the collapse of U.S. investment bank Lehman Brothers during the 2008 financial crisis. On Friday alone about $2.8 trillion was wiped off the value of world stocks, the biggest daily loss ever.

Sterling fell to a low around $1.3120, its lowest level since mid-1985. The euro also remained weak, after falling to a three-month low around $1.0910 on Friday.

Asian stocks markets opened weaker on Tuesday, with MSCI’s Asia ex-Japan index extending losses for a third day, down 0.5 percent. Japan’s Nikkei was off 0.7 percent.

“Markets already appear to be pricing in a full-blown recession in the U.K. and rising recession risk in the rest of Europe,” said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management.

Ratings agency Standard & Poor’s stripped Britain of its last remaining top-notch credit rating on Monday, warning that more downgrades could follow.

“In our opinion, this (referendum) outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK,” S&P said in a statement.

The yield on British 10-year government bonds fell below 1.0 percent for the first time as investors bet the Brexit vote would trigger a Bank of England interest rate cut aimed at steadying the economy.

U.S. stocks ended lower for a second day also, following European markets, pulled down by banking stocks amid uncertainty over London’s future as the region’s financial capital. Safe-haven bond and gold prices rose.

U.S. Treasury Secretary Jack Lew on Monday said he sees no signs of a financial crisis arising from Britain’s decision last week, although he admitted that the result does present additional “headwinds” for the U.S. economy.

Visiting Brussels, U.S. Secretary of State John Kerry said it was important that “nobody loses their head” as the EU and Britain deal with the fallout from the referendum.

European Central Bank President Mario Draghi expressed “sadness” on Monday at Britain’s vote to leave the European Union.

Draghi will fly to Brussels on Tuesday, where he is expected to brief European leaders about the impact of the UK vote on the euro zone at a two-day European Council meeting.

POLITICAL CONFUSION IN BRITAIN

With the ruling U.K. Conservative party looking for a new leader after Cameron’s resignation on Friday and lawmakers from the opposition Labour party stepping up a rebellion against their leader, Britain sank deeper into political chaos.

“There’s no political leadership in the UK right when markets need the reassurance of direction,” said Luke Hickmore of Aberdeen Asset Management, expressing the view of many in the City of London financial centre.

British broadcaster Sky News said work and pensions minister Stephen Crabb was also considering a bid for the Conservative party leadership, with business secretary Sajid Javid seeking to become finance minister. Both were in favour of staying in the EU. The editor of the Spectator magazine tweeted that Health Secretary Jeremy Hunt was also “highly likely” to launch a bid.

Cameron says he will stay on until October as a caretaker and that his successor should trigger the formal process of leaving the EU. His Conservative Party in parliament recommended choosing a successor by early September.

The prime minister sought to calm fears over the fallout of the referendum and said parliament should not try to block Britain’s departure. A majority of parliamentarians, like him, had argued that Britain should stay in the EU.

“I am clear, and the cabinet agreed this morning, that the decision must be accepted,” Cameron told parliament, which also faces a public petition for a new referendum.

While the question of whether to leave the EU has split the ruling Conservative party, divisions within the opposition are also deep. A wave of Labour lawmakers resigned from leader Jeremy Corbyn’s team on Monday, adding to the 11 senior figures who quit on Sunday, saying his campaign to keep Britain in the EU was half-hearted.

Corbyn, a left-winger who has strong support among ordinary party members, has said he is not stepping down.

Discontent with the political establishment in general and the Conservatives in particular was a factor behind the vote to leave, although many Brexit backers focused on immigration, complaining too many migrants had arrived from eastern Europe.

Piling on misery for beaten English “remain” voters, the country’s soccer team on Monday crashed out of the Euro 2016 soccer competition to tiny Iceland.

“We embarrassed ourselves three of four days ago in the referendum, we’ve embarrassed ourselves now. It’s a really, really sad time to be English,” lamented English soccer fan Alex in the French city of Nice.

EUROPE WANTS QUICKER RESOLUTION

Cameron’s refusal to start formal moves to pull the country out of the EU has prompted many European leaders to demand quicker action by Britain, the EU’s second largest economy after Germany, to leave the 28-country bloc.

“It should be implemented quickly. We cannot remain in an uncertain and indefinite situation,” French Finance Minister Michel Sapin said on France 2 television.

Guenther Oettinger, German member of the EU’s executive European Commission, said delay would hurt Europe as well as Britain. “Every day of uncertainty prevents investors from putting their funds into Britain, and also other European markets,” he told Deutschlandfunk radio.

Cameron heads to Brussels on Tuesday for a grim EU summit dinner, while the other 27 leaders will meet for the first time without him on Wednesday morning to plan their next moves. They are likely to stress a willingness to negotiate, but only after London binds itself to a tight two-year exit timetable.

The leaders of France, Germany and Italy met in Berlin on Monday and said Europe needed to respond to its people’s concerns by setting clear goals to improve security, the economy and prospects for young people.

German Chancellor Angela Merkel, who has appeared to take a softer line on Britain’s decision than some European leaders, said she had “neither a brake nor an accelerator” to control events, adding: “We just don’t want an impasse.”

The political, economic and regulatory uncertainty is being felt across the globe at a time when economies are still slowly recovering from the 2008 economic crisis, interest rates are close to zero, and central banks have fewer tools than normal to revive demand if countries enter recession.

South Korea said on Tuesday it would propose a supplementary budget of around 10 trillion won ($8.44 billion), in part to help it manage Brexit turmoil in financial markets.

 

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Sri Lanka's Amana Takaful Life announces IPO of Rs75Mn

June 28, 2016 (LBO) – Amana Takaful Life Limited (ATLL), a fully-owned subsidiary of Amana Takaful PLC, has announced an Initial Public Offering (IPO), via an offer for sale of 75 million rupees.

ATLL becomes the first segregated life insurer in Sri Lanka to do so following the mandatory segregation of Life and General insurance companies on 1st February 2015.

Listing on the Diri Savi Board of the Colombo Stock Exchange, the company will offer 50 million ordinary voting shares at 1.50 rupees per share, which represents a 10 percent stake in the company. The issue will open on 21st July 2016 and the Prospectus will be available from 4th July 2016.

The minimum subscription has been set at 1,000 shares and multiples thereof. The Financial Advisor and Manager to the offering is Acuity Partners (Pvt) Limited and Amana Bank is the Banker to the issue.

The IPO is expected to provide further impetus to ATLL which has outperformed the industry for three consecutive years in terms of growth, the company said.

“This Initial Public Offering, while further strengthening the company, will offer an opportunity for members of the public to become part of Amana Takaful Life’s growth story,” ATLL Chairman, Tyeab Akbarally said.

“We see tremendous opportunity in the growth story of Sri Lanka,” ATLL CEO, Reyaz Jeffrey said.

“The market is relatively untapped and we see increased demand for Life insurance, stemming from key economic activity and infrastructure development. As we approach USD 4000 per capita income, there will be key segments that will actively seek life insurance as opposed to the current push strategy.”

ATLL has outperformed the industry, growing at a Compound Annual Growth Rate (CAGR) of 31 percent over the last five years and recorded a Gross Written Premium (GWP) of 928 million rupees in the financial year ending 31st December 2015.

Comparatively, the industry grew by 11 percent CAGR over the same period and 20 percent in 2015. Despite 2015 being the company’s first year of operations as an independent entity, and notwithstanding pressure from increased post-segregation costs and lower yields on investment income, ATLL recorded a profit of 18 million rupees.

ATLL plans to grow at 34 percent CAGR over the next five years, supported by strategic initiatives that include growing its Agency force and entering in to Bancassurance arrangements with Amana Bank –discussions regarding which are underway, the company said.

It also envisages strengthening its sales force by arming them with digital devices, which also doubles up to provide real time activity tracking and management information.

Amana Takaful Life has several industry firsts under its belt, which include ‘Deergayu’ and Prosper – Shariah compliant retirement and investment plans respectively.

Amana Takaful Life was spun off from Amana Takaful PLC as part of an industry wide regulatory directive and is the successor of Amana Takaful PLC’s life business portfolio. The company is a fully-owned subsidiary of Amana Takaful PLC.

ATLL operates via a branch network of nearly 30 branches that cover 22 districts, including all major cities. As part of its commitment to remain ‘open to all’, ATLL serves all communities and employs a multi-ethnic team across its network.

 

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Sri Lanka to impose capital gains tax on stocks, Minister says

June 28 (Reuters) – Sri Lanka intends to impose a capital gains tax on profits from equities, a senior government minister said late on Monday, as the government attempts to shore up its finances to qualify for an IMF loan.

Sri Lanka’s cabinet approved reintroducing a capital gains tax on land early this month, but has not said whether it would be imposed on profits from buying and selling equities.

“We don’t know the details of it right now, but there will definitely be a capital gains tax on land transactions plus the stock exchange,” Patali Champika Ranawaka, a development minister, told a Foreign Correspondents’ Association forum.

The government is in the process of drafting new legislation for a capital gains tax with technical inputs from the International Monetary Fund.

Reimposing such a tax would be part of government moves to raise revenue, which it has promised the IMF to do in return for a $1.5 billion, three-year loan to support its economic reform agenda.

The capital gains tax could be around 10 percent and was likely to be imposed before the 2017 budget presentation in November this year, Ranawaka said.

Stockbrokers expect the capital gains tax to hit share transactions and discourage new small investors from entering the market.

Since Prime Minister Ranil Wickremesinghe announced the plan to reimpose capital gains tax on March 8, foreign investors have sold a net 5 billion rupees ($33.78 million) worth of shares.

Wickremesinghe abolished a 25 percent capital gain tax on land in 2002, which had been reduced from as high as 45 percent in 1978.

 

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Sri Lanka *market update* ASPI close down 0.2-pct, USD/LKR 1wk fwd up 148.05/20

ASPI closed at 6,307.40, down 10.81 points or 0.17 percent with losses in Ceylon Tobacco Company, Lion Brewary and Dialog Axaita, brokers said.

USD/LKR one-week dollar/rupee forwards traded at 148.05/20, up from Monday’s close of 148.20/40,  as exporters and banks sold the greenback after the island nation’s currency declined on a stronger dollar following the Brexit vote last week. Dealers said the three-day dollar/rupee forwards, which were not traded since June 15, started trading on Monday. The forwards, known as spot next, were at 147.80/148.00 per dollar firmer from Monday’s close of 148.05/25.

ASPI trading at 6,338.71, up 20.50 points or 0.32 percent with gains in Nestle Lanka and Dialog Axiata, brokers said. Turnover 377 million rupees. 

 

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COPE to consider Auditor General's report on bond issue tomorrow

June 28, 2016 (LBO) – Sri Lanka’s Parliament appointed Committee on Public Enterprises (COPE) will meet tomorrow to consider the Auditor General’s report on the bond investigation.

Parliamentarian and COPE member Dr. Nalinda Jayatissa told LBO, the committee will most probably arrive at a decision on the alleged bond scam based on the findings of the Auditor General’s report.

“Based on those reports, we may take a decision tomorrow, but appointing Governor again or not is a decision that should be taken by the President himself,” Jayatissa said.

“We don’t have an authority to issue orders.”

Central Bank Governor Arjuna Mahendran recently informed the Monetary Board that he would not be seeking re-appointment as Governor when his term finishes on Thursday until the COPE makes its findings known on issues related to the issuance of Treasury Bonds in the years 2015 and 2016.

The COPE decided to obtain a report from the Auditor General regarding the controversial bond issue in February this year.

 

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MANDATORY OFFER BY BROWNS HOTELS AND RESORTS LIMITED TO PURCHASE ALL THE REMAINING ORDINARY SHARES OF EDEN HOTEL LANKA PLC

http://www.cse.lk/cmt/upload_cse_announcements/1131467114077_.pdf

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TOKYO CEMENT COMPANY (LANKA) - DIVIDEND ANNOUNCEMENT

TOKYO CEMENT COMPANY (LANKA) PLC
Company ID: - TKYO
Date of Announcement: - 28.Jun.2016
Rate of Dividend: - Rs. 1.35 per share (Voting and Non-Voting) / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 04.Aug.2016
XD: - 05.Aug.2016
Payment: - 15.Aug.2016
Share Transfer Book Open

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Gap between male, female life expectancy narrows in Sri Lanka

June 27, 2016 (LBO) – The difference between female and male life expectancy at birth reduced in 2012 to 6.6 years compared with 8.4 years in 2001, latest data from the statistics office showed.

For the years 2011 to 2013, life expectancy is 72.0 years for males and 78.6 for females, while the life expectancies for males and females for the year 2001 were 68.8 and 77.2 years respectively.

Therefore there is also an increase of life expectancy for both males and females in year 2012 compared to year 2001.

Since the last Census was conducted in year 2012, population data from the 'Census 2012' and the deaths occurred in 2011, 2012 and 2013 are used to calculate the life expectancy for the years 2011‐2013.

Department of Census and Statistics published the Life Tables for Sri Lanka for the years 2011‐2013 recently.

These life tables are used to get an idea about the life expectancy of population in the country.

Sri Lanka has a long history in preparing life tables. The first life table was published in 1888. Life tables have been usually prepared for Census years since 1901.

Before the years 2011‐2013 the life tables were prepared for the years 2000‐2002.

Life expectancy at birth, life expectation of a person in a specific age group, and the probability of surviving of a population in one age group to another age group could be measured from a life table.

This information has immense practical importance in many disciplines, such as education, health, insurance and actuarial science.

 

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ABANS FINANCE (AFSL) - CORPORATE DISCLOSURE

http://www.cse.lk/cmt/upload_cse_announcements/4621467001127_.pdf

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KELANI CABLES - DIVIDEND ANNOUNCEMENTS

KELANI CABLES PLC
Company ID: - KCAB
Date of Announcement: - 27.Jun.2016
Rate of Dividend: - Rs. 4.50 per share / Interim Dividend
Financial Year: - 2016/2017
XD: - 07.Jul.2016
Payment: - 18.Jul.2016
Share Transfer Book Open

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EQUITY ONE - DIVIDEND ANNOUNCEMENTS

EQUITY ONE PLC
Company ID: - EQIT
Date of Announcement: - 27.Jun.2016
Rate of Dividend: - Rs. 0.15 per share (Would not be subject to a WHT of 10% tax) / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 28.Jul.2016
XD: - 29.Jul.2016
Payment: - 08.Aug.2016
Share Transfer Book Open

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SAMSON INTERNATIONAL - DIVIDEND ANNOUNCEMENTS

SAMSON INTERNATIONAL PLC
Company ID: - SIL
Date of Announcement: - 27.Jun.2016
Rate of Dividend: - Rs. 2.00 per share / First & Final Dividend
Financial Year: - 2015/2016
XD: - 07.Jul.2016
Payment: - 18.Jul.2016
Share Transfer Book Open

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Sri Lanka CB Governor won't seek reappointment until probe over

June 24, 2016 (LBO) – Sri Lanka’s Central Bank Governor Arjuna Mahendran has informed the Monetary Board that he will not seek a re-appointment when his term ends this month until a parliamentary probe over bond sales is complete.

The Central Bank in a press release said he would not seek re-appointment until “the Parliamentary Committee on Public Enterprises makes its findings known on issues related to the issuance of Treasury Bonds in the years 2015 and 2016.”

Mahendran’s term has been controversial after a bond issue last year raised questions of insider trading by a primary dealer, although the government later said the investigation had been completed.

 

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Sri Lanka *market update* Nikkei plunges 7.9 pct on Brexit, Cameron to resign

The Nikkei was down 7.9 percent and european markets are expected to open sharply lower, with London’s FTSE 100 seen down 476 points at 5,862, 7.5 percent lower, while the German DAX index is called 682 points lower at 9,575, a 6.6 percent fall. France’s CAC 40 is expected to open 308 points lower at 4,158, a decline of 6.9 percent.

David Cameron says he will step down as Prime Minister of the United Kingdom within three months after the shock victory for the campaign to leave the European Union.

 

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Sri Lankan rupee 1-wk forwards fall on importer dollar demand; Brexit weighs

COLOMBO, June 24 (Reuters) – Sri Lankan rupee one-week forwards fell on Friday as it faced pressure from a strengthening dollar after Britons voted to leave the European Union, cautioning importers, but selling of the U.S. currency by a state bank capped losses, dealers said.

Britain voted to leave the 28-member bloc, results from Thursday’s referendum showed, a stunning repudiation of the nation’s elites that deals the biggest blow to the European project of greater unity since World War Two.

The sterling plunged on the vote to leave and equities were hammered across the world on Friday as turmoil swept through global markets.

One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee in the absence of trade in three-day forwards, were trading at 147.70/90 per dollar at 0654 GMT, weaker from Thursday’s close of 147.10/30.

It hit a low of 148.10 per dollar in early trade. Dealers said one of the two state-run banks sold dollars at 148.00 rupees, before selling it at 147.90 rupees.

The central bank usually directs the market via two state-run banks. Central bank officials were not available for comment.

“The rupee is under pressure. The importer demand is there as the importers rushed in with the Brexit results,” said a currency dealer asking not to be named.

“With the Brexit, risk profile of countries like Sri Lanka will rise, and also, we will have to negotiate afresh trade preferences and other trade-related activities which might impact our exports apart from other global risks. Already the Indian rupee is reacting to it,” the dealer said.

Shiran Fernando, an analyst at Colombo-based Frontier Research, said Brexit will push investors to go back to safe haven assets as the U.S. currency is strengthening.

“There will be more volatility and investors will move away from risky assets. This will have an impact on Sri Lanka’s timing of dollar bond borrowing. That will have an impact in the near future. In the long term, Sri Lanka might see lower export earnings from Europe if the pound and euro fall.”

The country’s central bank said on Friday that its chief Arjuna Mahendran would not seek an extension of his term until a parliamentary committee clears his name from allegations levelled against him.

The Sri Lankan stock index was down 0.5 percent at 6,365.24 as of 0707 GMT, on a turnover of 197.2 million rupees ($1.34 million)

 

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Brexit could impact Sri Lanka borrowings, trade, says CCC

June 24, 2016 (LBO) – Sri Lanka could feel the impact of Brexit in its commercial borrowings, as the external environment becomes more volatile, while exporters should make greater effort to diversify targeted markets, the Ceylon Chamber of Commerce said.

“The negotiations around the terms of Britain’s new engagement with Europe are likely to take a couple of years, and so the full impact on international trade is yet to be seen,” a statement said.

“We need to see what sort of a new trading arrangement Britain would have with the rest of the EU, in order to calibrate its own new trading arrangement with Britain, as the GSP Plus scheme will no longer include Britain.”

Market volatility could also push investors away from frontier and emerging markets like Sri Lanka as they seek safer assets, the statement said. “Any appreciation of the USD would also affect Sri Lanka.”

CCC’s statement on Britain’s EU referendum is below:

Impact from the financial markets channel

The effect of Britain’s EU referendum results on international financial markets would be a key channel of impact for Sri Lanka, as the external commercial borrowing environment becomes more volatile.

The immediate volatility and uncertainty in currency and equity markets across Britain, Europe and Asia are at levels not seen since the 2008 financial crisis. At that time too, Sri Lanka was caught in the global storm and despite no direct impacts, had substantial indirect impacts. Sri Lanka now is much more exposed to international markets than at that time and therefore would face impacts through this channel.

In an already volatile external environment, this poses substantial risks. Generally, in times of volatility, investors would tend to stay away from frontier and emerging markets like Sri Lanka and go to safer assets. This would include the USD, and any appreciation of the USD would also affect Sri Lanka.

The IMF funding package is timely, then, as the country’s external reserves are provided some cushioning.

Impact from the trade channel

According to the latest data, Sri Lanka exports 10 percent of our exports to the UK (around USD 1 billion) and 28.8 percent of our exports to the EU (around USD 3 billion)

If the estimates from various expert groups on the impact of Britain’s exit on the British economy are correct, the impact on the health and dynamism of the British economy will be substantial and that will no doubt have impacts on Sri Lanka’s trade with Britain.

In the medium-term, the impact on economic activity and dynamism in Britain and Europe would impact on the markets for our exports there. Britain is a substantial market for other EU countries, and any reduction in their export earnings and overall incomes would affect their demand for imports.

The negotiations around the terms of Britain’s new engagement with Europe are likely to take a couple of years, and so the full impact on international trade is yet to be seen. We need to see what sort of a new trading arrangement Britain would have with the rest of the EU, in order to calibrate its own new trading arrangement with Britain, as the GSP Plus scheme will no longer include Britain.

Moving Forward

All this further reiterates the need for Sri Lanka to aggressively pursue diversification of export markets (including through new trade agreements), create a conducive environment for our businesses to thrive and be agile in a volatile environment, and take measures to boost the competitiveness of our exports.

 

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ASIAN ALLIANCE INSURANCE - CORPORATE DISCLOSURE

http://www.cse.lk/cmt/upload_cse_announcements/961466765492_.pdf

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SOFTLOGIC HOLDINGS - CORPORATE DISCLOSURE

http://www.cse.lk/cmt/upload_cse_announcements/3051466765836_.pdf

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CARSON CUMBERBATCH - DIVIDEND ANNOUNCEMENT

CARSON CUMBERBATCH PLC
Company ID: - CARS
Date of Announcement: - 24.Jun.2016
Rate of Dividend: - Rs. 1.50 per share (Would not be subject to a WHT of 10%) / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 29.Jul.2016
XD: - 01.Aug.2016
Payment: - 09.Aug.2016
Share Transfer Book Open

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Sri Lanka *market update* ASPI close down 0.4-pct, New chair at Blue Diamonds

Dr. Dayanath Jayasuriya has been appointed as Chairman and Non-Executive Independent Director of the troubled Blue Diamonds Jewellery Worldwide Plc. following the step down of Chinese controlling shareholder Xia Liqiang. He will step down as Chairman but will remain on the Blue Diamonds Board as Deputy Chairman and Managing Director. The company also announced the appointment of S. Prabaharan as an Executive Non-Independent Director. Jayasuriya PC is a Fellow of the International Compliance Association (UK). He was also former Chairman of Insurance Board of Sri Lanka and a Director of the Public Utilities Commission, the National Procurement Agency among others.

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Asia stocks, sterling rise as Brexit anxiety abates

June 23 (Reuters) – Asian shares edged up and sterling stood close to its peak for the year on Thursday, as investors were cautiously optimistic that British voters would opt to remain in the European Union at a referendum later in the session.

Two opinion polls published late on Wednesday, a few hours before voters were due to begin to cast their votes, showed the “Remain” camp gaining momentum in the closely divided campaign.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent in early trading, shrugging off modest overnight losses on Wall Street.

Japan’s Nikkei share average rose 0.3 percent.

“Markets seem to have almost entirely priced in a ‘Remain’ vote win, meaning that the market moves and volatility around the vote may be far less than many had been expected,” wrote Angus Nicholson, market analyst at IG in Melbourne.

“Nonetheless, markets are still incredibly nervous and some sharp market moves are likely over the next 24 hours,” he said.

(Latest Reuters news on the referendum, including full multimedia coverage: )

Sterling rose to $1.4847, its highest against the dollar in 2016, and was last up 0.6 percent at $1.4798.

The perceived safe-haven yen also slipped on receding fears of the market turmoil that would likely follow if Britain were to pull out of the EU.

The dollar added 0.2 percent to 104.69 yen, while the euro gained 0.5 percent to 118.54 yen.

The euro rose 0.2 percent to $1.1322, while the dollar index, which tracks the greenback against a basket of six rival currencies, slipped 0.1 percent to 93.582.

On the U.S. data front, home resales rose to a more than nine-year high last month against a backdrop of historically low mortgage rates, adding to recent upbeat second quarter data.

Crude oil prices rose after settling down more than 1 percent on Wednesday after the U.S. government reported a smaller-than-expected inventory drawdown.

Brent added 0.7 percent to $50.23 a barrel after shedding 1.5 percent on Wednesday, while U.S. crude was up 0.8 percent at $49.53 after giving up 1.4 percent in the previous session.

Spot gold plumbed a two-week low of $1,260.36 an ounce and was last down 0.4 pct at $1,261.24.

 

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Fitch Downgrades NDB; Affirms 8 Sri Lanka Banks, Negative Outlook on DFCC, Sampath

Jun 23, 2016 (LBO) – Sri Lanka's National Development Bank PLC's (NDB) national long­ term rating has been downgraded to 'A+(lka)' from 'AA­(lka)', Fitch rating said in a statement.

The ratings on eight other Sri Lanka banks have been affirmed.

The outlooks have been revised on DFCC Bank PLC's (DFCC) and Sampath Bank PLC's (Sampath) national long­term ratings to negative, the agency said.

The full statement follows:

Fitch Ratings has downgraded National Development Bank PLC's (NDB) National Long­Term Rating to 'A+(lka)' from 'AA­(lka)'.

The ratings on eight other Sri Lanka banks have been affirmed.

The agency also revised the Outlook on DFCC Bank PLC's (DFCC) and Sampath Bank PLC's (Sampath) National Long­Term Ratings to Negative.

The Long­Term Issuer Default Ratings (IDRs) on National Savings Bank (NSB) and Bank of Ceylon (Bank of Ceylon) have been affirmed at 'B+' and their National Long­Term Ratings have been affirmed at 'AAA(lka)' and 'AA+(lka)', respectively.

The Outlooks on the IDRs of NSB and Bank of Ceylon have been maintained at Negative while the Outlooks on their National Long­Term Ratings have been maintained at Stable.

Fitch has also affirmed the National Long­Term Rating of People's Bank (Sri Lanka) (People's Bank) at 'AA+(lka)' with a Stable Outlook.

Furthermore, Fitch has affirmed the National Long­Term Rating of Commercial Bank of Ceylon PLC (CB) at 'AA(lka)', Hatton National Bank PLC (HNB) at 'AA­(lka)', and Seylan Bank PLC (Seylan) at 'A­(lka)'.

DFCC's Support Rating Floor (SRF) was revised to 'B­' from 'B'. A full list of rating actions is included at the end of this rating action commentary.

KEY RATING DRIVERS IDRS, NATIONAL RATINGS AND SENIOR DEBT

The rating actions follow Fitch's periodic review of the large banks peer group. Fitch downgraded its assessment of Sri Lankan banks' operating environment to 'b+' from 'bb­' and assigned a negative outlook.

Fitch believes operating conditions have become more challenging ­ as signalled by the downgrade of the sovereign rating to 'B+' from 'BB­' in February 2016 ­ and expects increased volatility to add pressure on the banks' credit metrics.

However, Fitch maintains a stable outlook for the Sri Lankan banking sector for 2016, as a material deterioration in the sector's credit profile is not expected in the short-term.

Fitch believes the underlying operating conditions supporting sector performance are likely to remain intact and pressure on the economic environment is likely to be contained through tighter monetary policy.

The operating environment is a key rating driver for the Sri Lankan banking sector. It constrains the Viability Rating (VR) of some banks, as it is rare for a VR to be assigned significantly above the sovereign rating, however well banks score on other factors.

Banks With Long­Term Ratings Driven by Sovereign­Support The IDRs and National Long­Term Ratings of NSB and Bank of Ceylon, and the National Long­Term Rating of People's Bank, reflect Fitch's expectation of extraordinary support from the sovereign (B+/Negative).

Fitch believes state support for NSB stems from its policy mandate of mobilising retail savings and primarily investing them in government securities.

The National Savings Bank Act contains an explicit deposit guarantee and Fitch is of the view that the authorities would support, in case of need, the bank's depositors and senior unsecured creditors to maintain confidence and systemic stability.

Fitch has not assigned a VR to NSB, as it is considered to be a policy bank. Fitch expects support for Bank of Ceylon and People's Bank to stem from their high systemic importance, quasi­sovereign status, role as key lenders to the government and full state ownership.

The Negative Outlook on Bank of Ceylon's and NSB's IDRs reflect the Negative Outlook on the sovereign's rating.

The Outlook on Bank of Ceylon's, NSB's and People's Bank's National Long­Term Ratings is Stable as their national ratings reflect the banks' creditworthiness relative to the best credit in Sri Lanka. The ratings of Bank of Ceylon, NSB and People's Bank are unlikely to be affected unless Fitch's expectations of sovereign support change.

The US Dollar senior unsecured notes issued by NSB and Bank of Ceylon are rated at the same level as the banks' Long­Term Foreign­Currency IDRs, as the notes rank equally with other senior unsecured obligations. The notes have a Recovery Rating of 'RR4'.

Bank of Ceylon's VR reflects its thin capitalisation and weak asset quality.

This is counterbalanced by its strong domestic funding franchise, which is underpinned by its state linkages. Fitch considers state support as Bank of Ceylon's primary rating driver, even though its VR is at the same level as its SRF.

The National Long­Term Rating of Seylan reflects Fitch's expectation of state support due to its state shareholding, which came about in the aftermath of the bank's crisis in December 2008, and higher share of banking sector deposits relative to some peers.

Seylan has a lower support­driven rating due to its smaller market share compared with larger peers. Fitch believes Seylan's standalone financial strength has improved, reaching the same level as it support­driven rating.

Seylan's senior debt is rated at the same level as its National Long­Term Rating, as the debentures rank equally with other senior unsecured obligations.

Banks With Long­Term Ratings Driven by Intrinsic Strength The downgrade of NDB's National Long­Term Rating reflects the decline in its capitalisation alongside continued strong loan growth, and weaker profitability. Fitch's expectation that the bank's higher risk appetite could dilute the benefit of a capital infusion has been incorporated in the rating action.

NDB's ratings reflect its satisfactory asset quality, weaker franchise and lower capitalisation relative to higherrated peers.

The Outlook on DFCC's National Long­Term Rating has been revised to Negative to reflect weakening capital buffers that stem from weaker asset quality metrics, increased loan growth and below­average internal capital generation.

The Negative Outlook on DFCC's IDR reflects Fitch's approach of generally capping bank ratings at the sovereign rating level. This is because of the likely adverse impact on the bank's credit profile from the sovereign's deteriorating credit profile and increasing risks in the domestic operating environment. DFCC's VR captures its developing commercial banking franchise and still high capitalisation.

Its weaker asset quality compared with better­rated peers weighs on its rating. DFCC's US dollar notes are rated at the same level as its Long­Term Foreign­Currency IDR. The notes have a Recovery Rating of 'RR4'. DFCC's Sri Lanka rupee­denominated senior debt is rated at the same level as its National Long­Term Rating, as the debentures rank equally with other senior unsecured obligations.

Sampath's Outlook has been revised to Negative as Fitch expects the bank's capitalisation to worsen beyond previous expectations. Fitch does not believe Sampath can sustain its capitalisation purely through retained earnings. The bank's ratings reflect its lower capitalisation and higher risk appetite relative to peers, which counterbalance its satisfactory asset quality and improving franchise.

The bank's regulatory Tier 1 capital­adequacy ratio continued to deteriorate and stood at 7.6% by end­March 2016 (end­2015: 8%; end­2014: 9%). The National Long­Term Rating of CB reflects its measured risk appetite relative to peers, strong funding profile, solid domestic franchise and sound performance.

The ratings reflect Fitch's expectation that its non­domestic operations will remain small. The National Long­Term Rating of HNB reflects its strong domestic franchise, satisfactory capitalisation and strong performance, counterbalanced by a higher risk appetite as seen through sustained high loan growth that has put pressure on its funding and liquidity profile. HNB's senior debentures carry the same rating, as they rank equal with other unsecured obligations.

SUPPORT RATING AND SUPPORT RATING FLOOR

The SRs and SRFs of privately owned DFCC reflect its relative lower systemic importance, in Fitch's view. The SR and SRFs of NSB and Bank of Ceylon reflect the state's ability and propensity to provide support to the banks given their high importance to the government and high systemic importance.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

NDB's, DFCC's, Sampath's, Bank of Ceylon's, Seylan's, CB's and HNB's old­style Basel II Sri Lanka rupee­denominated subordinated debt is rated one notch below their National Long­Term Ratings to reflect the subordination to senior unsecured creditors.

RATING SENSITIVITIES IDRS, NATIONAL RATINGS AND SENIOR DEBT

The banks' credit profiles are sensitive to changes in the operating environment. Fitch may take negative rating action if the banks' appetite for risk­taking and pressure on key credit metrics increases amid challenging operating conditions that raises capital impairment risks which are not counterbalanced through adequate capital buffers.

Fitch may take positive rating action if stronger risk management and higher capital buffers enhance the resilience of the banks' balance sheets, but this is only likely to happen in the medium term. Banks With Long­Term Ratings Driven by Sovereign Support Any change in the sovereign rating or perception of state support to NSB, Bank of Ceylon and People's Bank could result in a change in their SRFs.

Fitch may downgrade NSB's National Long­Term Rating if there is a reduced expectation of state support through, for instance, the removal of preferential support, or a substantial change in its policy role or deviation from mandated core activities indicating its reduced importance to the government.

A downgrade of Bank of Ceylon's IDRs will only result from a downgrade of its VR and SRF. Visible demonstration of preferential support for Bank of Ceylon and People's Bank in the form of an explicit guarantee may be instrumental to an upgrade of their National Long­Term Ratings. NSB's and Bank of Ceylon's senior debt ratings are sensitive to changes in the banks' Long­Term IDRs.

The Recovery Ratings of NSB and Bank of Ceylon are sensitive to Fitch's assessment of potential recoveries for creditors in case of default or non­performance. Bank of Ceylon's VR may come under pressure if there is a continued decline in capitalisation through a surge in lending or further decline in asset quality alongside high dividend payouts.

Further deterioration in the operating environment reflected in a decline in Bank of Ceylon's key credit metrics could negatively affect its VR. A downgrade of Seylan's rating could result from a reassessment of state support and a material reversal in recent improvements to its asset quality, together with a weakening financial profile.

In the absence of changes to Fitch's support assessment, an upgrade of Seylan's rating would be contingent on further improvements in its standalone profile through improved asset quality and provisioning, mainly stemming from recovery of legacy NPLs. Seylan should also maintain other credit metrics in line with higher­rated peers to warrant an upgrade.

Seylan's senior debt ratings will move in tandem with its National Long­Term Rating. Banks with Long­Term Ratings Driven by Intrinsic Strength NDB's National Long­Term Rating may be downgraded if the bank is not able to sustain its capitalisation at a level commensurate with its risk profile. Drivers for an upgrade are the quantum of a potential capital injection and its sensible deployment alongside the sustainability of a sufficient capital buffer to counterbalance weaknesses in NDB's credit profile.

Fitch does not see upside potential for NDB's ratings in the near term, as the bank is likely to face difficulty sustaining a capital buffer in line with higher­rated peers due to its higher risk appetite and operating environment­related risks. The Outlook on DFCC's National Long­Term Rating may be revised to Stable if the bank can sustain capital buffers to sufficiently cushion its weaker asset quality amid higher operating environment­related risks and counterbalance its developing franchise relative to more established peers.

Fitch expects project finance to remain integral to the bank's business and, as such, expects the bank to maintain higher capitalisation to offset the higher risk of this business. DFCC's IDRs and National Long­Term Rating could be downgraded if there is a sustained deterioration in its capitalisation or further weakening of the operating environment. DFCC's RR is sensitive to Fitch's assessment of potential recoveries for creditors in case of default or non­performance.

A downgrade of Sampath's National Long­Term Rating could result from a sustained decline in capitalisation, further increase in risk­taking or a sharp decline in asset quality. Fitch would revise Sampath's Outlook to Stable if there is a capital infusion and the bank maintains sufficient capital buffers commensurate with its risk profile and operating environment­related risks. Enhanced resilience against a volatile operating environment could be positive for CB's National LongTerm rating.

The bank's ratings could be downgraded if its ability to withstand cyclical asset­quality deterioration declines due to lower earnings and capitalisation. In addition, any marked weakening in its deposit franchise and deviation from its measured risk appetite, both viewed by Fitch as key factors that differentiate CB from its lower­rated peers, would be negative. An upgrade of HNB's National Long­Term Rating is contingent on the bank achieving sustained improvements in its financial profile, in particular in terms of its funding, and a moderation of its risk appetite. A rating downgrade could result from a significant increase in risk­taking and operating environment­related risks, unless sufficiently mitigated through capital and financial performance. Further weakening of HNB's liquidity position could also negatively affect its rating.

SUPPORT RATING AND SUPPORT RATING FLOOR

Reduced propensity of the government to support systemically important banks could result in a downgrade in the assigned SRs and SRFs, but Fitch sees this to be unlikely in the medium­term. A change in the sovereign's ratings could also lead to a change in the SRs and SRFs of the banks.

SUBORDINATED DEBT

Subordinated debt ratings will move in tandem with the banks' National Long­Term Ratings.

FULL LIST OF RATING ACTIONS

The rating actions are as follows: National Development Bank PLC: National Long­Term Rating downgraded to 'A+(lka)' from 'AA­(lka)'; Stable Outlook Basel II compliant subordinated debentures downgraded to 'A(lka)' from 'A+(lka)' DFCC Bank PLC: Long­Term Foreign­Currency IDR affirmed at 'B+'; Negative Outlook Long­Term Local­Currency IDR affirmed at 'B+'; Negative Outlook Short-term Foreign­Currency IDR affirmed at 'B' National Long­Term Rating affirmed at 'AA­(lka)'; Outlook revised to Negative from Stable Viability Rating affirmed at 'b+' Support Rating affirmed at '4' Support Rating Floor revised to 'B­' from 'B' US dollar senior, unsecured notes affirmed at 'B+'; Recovery Rating at 'RR4' Sri Lanka rupee­denominated senior unsecured debentures affirmed at 'AA­(lka)' Basel II compliant Sri Lanka rupee­denominated subordinated debentures affirmed at 'A+(lka)' Sampath Bank PLC: National Long-term Rating affirmed at 'A+(lka)'; Outlook revised to Negative from Stable Basel II compliant outstanding subordinated debentures affirmed at 'A(lka)' National Savings Bank: Long­Term Foreign­Currency IDR affirmed at 'B+'; Negative Outlook Long­Term Local Currency IDR affirmed at 'B+'; Negative Outlook Short­Term Foreign­Currency IDR affirmed at 'B' National Long­Term Rating affirmed at 'AAA(lka)'; Stable Outlook Support Rating affirmed at '4' Support Rating Floor affirmed at 'B+' US dollar senior unsecured notes affirmed at 'B+'; Recovery Rating at 'RR4' Bank of Ceylon: Long­Term Foreign­Currency IDR affirmed at 'B+'; Negative Outlook Long­Term Local­Currency IDR affirmed at 'B+'; Negative Outlook Short­Term Foreign­Currency IDR affirmed at 'B' National Long­Term Rating affirmed at 'AA+(lka)'; Stable Outlook Viability Rating affirmed at 'b+' Support Rating affirmed at '4' Support Rating Floor affirmed at 'B+' US dollar senior unsecured notes affirmed at 'B+'; Recovery Rating at 'RR4' Basel II compliant Sri Lanka rupee­denominated subordinated debentures affirmed at 'AA(lka)' People's Bank (Sri Lanka): National Long­Term Rating affirmed at 'AA+(lka)'; Outlook Stable Seylan Bank PLC: National Long­Term Rating affirmed at 'A­(lka)'; Stable Outlook Sri Lanka rupee­denominated senior unsecured debentures affirmed at 'A­(lka)' Basel II compliant subordinated debentures affirmed at 'BBB+(lka)' Commercial Bank of Ceylon PLC: 6/23/2016 Press Release https://www.fitchratings.com/site/pressrelease?id=1007844 6/8 National Long­Term Rating affirmed at 'AA(lka)'; Stable Outlook Basel II compliant outstanding subordinated debentures affirmed at 'AA­(lka)' Hatton National Bank PLC: National Long­Term Rating affirmed at 'AA­(lka)'; Stable Outlook Sri Lanka rupee­denominated senior unsecured debentures affirmed at 'AA­(lka)' Basel II compliant outstanding subordinated debentures affirmed at 'A+(lka)'

 

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Sri Lanka's benefits from IMF depend on reform effectiveness: Moody's

June 23, 2016 (LBO) – Moody’s Investors Service says that whether or not Sri Lanka’s (B1 negative) credit profile demonstrates a temporary or more enduring improvement from its International Monetary Fund’s (IMF) program will depend on how effectively the program’s ambitious reforms are implemented.

Moody’s conclusions are outlined in its just released report: “Government of Sri Lanka: Reform Implementation Key to Lasting Fiscal, External Improvement from IMF Program”.

The IMF approved on 3 June 2016, a 1.5 billion US dollars three-year Extended Fund Facility (EFF) program for Sri Lanka, with the main focus on fiscal reforms, as well as reforms to the country’s state-owned enterprises (SOEs).

Moody’s report points out that the EFF program aims to address Sri Lanka’s immediate balance of payments pressure, reflected in the fall in foreign currency reserves to low levels. In conjunction with financing, the program envisages fiscal reforms to address one of the causes of Sri Lanka’s macro-economic imbalances and its balance of payments problems.

To assess the likely impact of the IMF program on future economic, fiscal and balance of payments developments in Sri Lanka, Moody’s has examined previous IMF programs in countries facing similar external liquidity, fiscal and structural reform challenges as Sri Lanka.

These include Stand-By Agreements with Pakistan (B3 stable, 2008), Sri Lanka (2009), Romania (Baa3 positive, 2009), Mongolia (B2 negative, 2009), Jordan (B1 stable, 2012), and Ghana’s 2009 poverty reduction and growth program. Many of these programs were followed by subsequent programs.

Based on the above examples, Moody’s has found that the main impact of the program is likely to be external liquidity relief. In addition, Sri Lanka’s budget deficit is likely to narrow as the EFF garners consensus around fiscal consolidation.

However, the experience of other countries shows limited and often short-lived progress in fiscal consolidation.

Nevertheless, Moody’s recognizes that these countries’ fiscal metrics could have deteriorated more significantly in the absence of a program.

Therefore, in Moody’s view, while the IMF program will alleviate Sri Lanka’s external liquidity pressures, a more durable improvement in the macro-economic and balance of payments pressures will depend on the extent to which authorities can durably reverse the ongoing fiscal deterioration while improving Sri Lanka’s international competitiveness and attractiveness to foreign investors.

The study underpins Moody’s view that effective policy implementation determines the extent to which a country reaps the benefits of an IMF program.

http://www.lankabusinessonline.com/wp-content/uploads/2016/06/Govt.-of-Sri-Lanka.pdf

 

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Sri Lankan rupee 1-wk forwards edge up on dollar sales

June 23 (Reuters) – Sri Lankan rupee one-week forwards edged up on Thursday due to dollar selling by a state-run bank, while demand for the greenback from importers amid low liquidity weighed on the currency, dealers said.

 

A decision by Moody’s to revise down the country’s sovereign rating outlook and lack of exporter conversions also weighed on the local currency, dealers said, adding that the central bank had prevented the spot currency from trading via moral suasion. One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee in the absence of trade in three-day forwards, were at 147.30/50 per dollar at 0600 GMT, higher than Wednesday’s close of 147.40/70.

 

The central bank usually directs the market via two state-run banks, but on Thursday, it was not clear the bank sold dollars on behalf of the apex bank.

 

Dealers said the market was perplexed by the central bank’s intervention in both spot rupee and forwards at a time when the rupee was facing downward pressure.

 

Central bank officials were not available for comment. Moody’s Investors Service on Monday changed the country’s outlook to negative from stable, citing further weakening in some fiscal metrics in an environment of subdued GDP growth, which could lead to renewed balance of payments pressure.

 

The central bank reduced the spot rupee’s peg to 144.50 per dollar last week from 144.75. The spot rupee was not actively traded for an eighth straight session on Thursday, dealers said.

 

For a sixth straight session, there was no active trading in three-day dollar/rupee forwards, known as spot next.
The forwards closed at 144.85/90 per dollar on June 15. Spot next, which has acted as proxy for the spot currency since January, indicates the exchange rate for the day following conventional spot settlement.

 

For Thursday’s trade, the spot next settlement takes place five days ahead due to the intervening weekend.
Foreign investors net bought 6.67 billion rupees ($46.06 million) worth of government bonds in the week ended June 15, central bank data showed.

 

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YORK ARCADE HOLDINGS - DIVIDEND ANNOUNCEMENT

YORK ARCADE HOLDINGS PLC
Company ID: - YORK
Date of Announcement: - 23.Jun.2016
Rate of Dividend: - Rs. 0.30 (30 cents) per share / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 29.Jul.2016
XD: - 01.Aug.2016
Payment: - 09.Aug.2016
Share Transfer Book Open

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Sri Lanka consumer prices soar 5.3-pct in May

Jun 22, 2016 (LBO) – Sri Lanka’s inflation climbed for the fourth straight month in May after recording a fall of 0.7 percent in January, according to the National Consumer Price Index (NCPI) introduced in October last year with 2013 as the base.

According to the Census and Statistics Department inflation was 5.3 percent in May from a year earlier, compared with a 4.3 percent increase witnessed in April 2016.

NCPI has been calculated as 113.7 for May 2016.

This shows an increase of 2.1 index points or a percentage of 1.9 compared to the previous month’s (April) index of 111.6.

This monthly change is due to the expenditure value of food items increased by 0.91 percent and expenditure value of non-food items increased by 0.97 percent.

The expenditure value of food commodity group has increased by 0.91 percent in May 2016 compared to April 2016.

“This was mainly due to the price increases in vegetables, rice, limes, potatoes, dhal-masoor, red onions, green chilies, chicken, sugar, garlic and dried fish compared to the previous month (April),” the department said.

“However, decreases in prices were recorded for eggs, papaw, banana, mangoes and coconut compared to the previous month (April).”

 

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Sri Lanka *market update* Asian shares up, Adam Investments share sub division

Adam Investments PLC at a meeting of Board Directors of the company have resolved to recommend to shareholders that ordinary shares of the company in issue be increased by way of a subdivision whereby one ordinary share will be subdivided into two ordinary shares. On this basis the Four Hundred Forty Nine Million Two Hundred Seventy Six Thousand Two Hundred (449,276,200) Ordinary shares in issue as at date will be increased to Eight Hundred Ninety Eight Million Five Hundred Fifty Two Thousand Four Hundred (898,552,400) Ordinary shares.As a result of the recommended subdivision there will be no change in the stated capital of the company. The proposed subdivision, will be subject to shareholder approval at a shareholder meeting at the next Annual General Meeting and the dates will be informed later.

Asian stocks edged up on Wednesday as nervous investors counted down to Britain’s make-or-break European Union referendum.  MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 percent. Japan’s Nikkei extended losses to shed 1 percent. China’s CSI 300 index and the Shanghai Composite both advanced about 0.3 percent, while Hong Kong’s Hang Seng slipped 0.1 percent.

 

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Opportunities for value investors, rate hikes limited: JB Securities

June 22, 2016 (LBO) – Sri Lanka’s equity market offers opportunities for value investors as market multiples have contracted, JB Securities says in their latest research report.

Although the economy is forecast to grow 4.5 percent in 2016, compared with 4.8 percent last year, further increases in interest rates are likely limited to 25 basis points. Inflation too should stay within tolerable limits of 4 percent to 6 percent, the top securities firm adds.

“Market multiples have significantly contracted, quality counters that were trading at rich valuations have corrected offering quality at a fair price. Value investors can find attractively priced blue chip counters,” the Outlook for Equities report said.

Nevertheless, rising interest rates are unfavorable for equities. At the margin most retails investors will select fixed income instruments than equities to invest in, the report added.

“A rate hike larger than 25bps will likely not happen as headline inflation will remain within the Central
Bank’s tolerable range of 4 percent to 6 percent.”

Sri Lanka resorted to an IMF support facility of 1.5 billion dollars this year due to a widened budget deficit and an exit of capital from the government securities market. The IMF facility is expected to bring in discipline to government finances while making policy more predictable, JB Securities said.

“This is likely to stabilize risk sentiment which can support FII inflows in the 2H-2016,” the report said, referring to foreign investment.

“We are of the view that a further 25bps policy rate hike is still probable in 2H-2016.”

“Yields on government securities will likely come down due to inflows from FIIs reentering the market taking comfort from the ongoing IMF programme. Further, the government is hoping to go to the international markets to meet funding requirements for upcoming debt maturities thus limiting demand on domestic resources.”

The firm said they forecast USD/LKR to reach 149 by the end of the year.

“Upside risks to this view is more aggressive Fed tightening than expected, and a significant devaluation in the Chinese Yuan which would pressure on USD/LKR to move higher.”

Healthcare has been a star performer, while rising nominal interest rates are more propitious for large commercial banks with a wide retail franchise, JB Securities said.

Tourism remains a sunrise industry and the industry outlook remains favorable, although pricing power may abate due to new supply coming on stream.

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Oil prices above USD50, buoyed by U.S. stock draw

 

 

 

 

 

 

 

 

 

 

            June 22 (Reuters) – Oil prices rose in early Asian trading on Wednesday, with U.S. crude joining Brent above $50 a barrel after data from the American Petroleum Institute (API) showed a larger than expected draw on stocks.

U.S. crude futures’ August contract, the new front month from Wednesday, had climbed 35 cents to $50.20 a barrel by 0039 GMT. That marked the first time it had risen above $50 since June 10.

Brent crude futures were up 25 cents at $50.87 a barrel, after settling down 3 cents at $50.62 on Tuesday.

U.S. crude inventories fell by 5.2 million barrels for the week ended June 17, the API said. The trade group’s figures were triple the draw of 1.7 million barrels forecast by analysts in a Reuters poll.

The U.S. government’s Energy Information Administration will issue official stockpile data on Wednesday.

Markets remain jumpy over the possibility the United Kingdom will vote to leave the European Union on Thursday in a referendum, with polls showing little difference between the “remain” and “leave” camps.

The dollar clung onto modest gains early on Wednesday after Federal Reserve Chair Janet Yellen held the line of “gradual increases” in U.S. rates, while sterling’s short-covering rally lost momentum a day ahead of the referendum.

Japan’s Nikkei was down nearly 0.7 percent in early trading, while gold prices edged lower.

 

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Sri Lankan rupee 1-wk forwards fall on importer dollar demand; stocks slip

June 22 (Reuters) – Sri Lankan rupee one-week forwards fell on Wednesday on importer dollar demand amid low liquidity for the U.S. currency after Moody’s revised down its outlook on the island nation’s sovereign rating, dealers said.

The local currency was also under pressure due to lack of exporter conversions, while moral suasion by the central bank prevented spot trade, they added.

Moody’s Investors Service on Monday changed the country’s outlook to negative from stable, citing further weakening in some fiscal metrics in an environment of subdued GDP growth, which could lead to renewed balance of payments pressure.

One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee in the absence of trade in three-day forwards, were trading at 147.90/148.00 per dollar on Wednesday, weaker than Tuesday’s close of 147.30/70.

“The pressure is there as there are not much of (dollar) conversions, very low (dollar) liquidity, people are not selling dollars with rising uncertainty,” said a currency dealer, asking not to be named.

Dealers said the market was perplexed by the central bank’s intervention in both spot rupee and forwards. Central bank officials were not available for comment.

The central bank reduced the spot rupee’s peg to 144.50 per dollar last week, from 144.75 in the previous session.

The spot rupee was not actively traded for a seventh straight session on Wednesday, dealers said. The spot closed at 144.85/95 per dollar on June 13.

The spot rupee was pegged down from 145.75 levels in early June after the local currency rose following increased dollar conversions by exporters and overseas funds.

For a fifth straight day, there was no active trading in three-day dollar/rupee forwards, known as spot next.

The forwards closed at 144.85/90 per dollar on June 15. Spot next, which has acted as proxy for the spot currency since January, indicates the exchange rate for the day following conventional spot settlement.

For Wednesday’s trade, the spot next settlement takes place five days ahead due to the intervening weekend.

Foreign investors net bought 6.67 billion rupees ($46.06 million) worth of government bonds in the week ended June 15, central bank data showed. Lack of large inflows from exporters and borrowings were weighing on the currency, dealers said.

 

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Sri Lanka to obtain IDA loan for reforms, competitiveness

June 22, 2016 (LBO) – Sri Lanka’s cabinet has approved obtaining a 100 million US dollar loan from the International Development Agency to develop the Sri Lankan economy by implementing reforms under three aspects.

Removal of obstacles for the competitiveness in private sector, transparency and improvement of management in public sector, and improvement of the fiscal sustainability are the three aspects.

Prime Minister in his capacity as the Minister of National Policies and Economic Affairs has made the proposal.

 

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Sri Lanka recall mid income housing projects in Kandy, Galle, and Homagama

Jun 22, 2016 (LBO) – Sri Lanka’s cabinet has decided to recall proposals for housing projects in Kundasale, Homagama, Galle, and Nittambuwa and grant fresh approvals for projects in Panadura and Yakkala, a statement said.

“The Steering Committee appointed in this regard has recommended to implement housing projects in Panadura, Homagama (Jalthara Phase II), Yakkala, and Ragama and to recall proposals for housing projects in Kundasale, Homagama, Galle, and Nittambuwa. a statement on approved cabinet decisions said.

Proposals have been called according to the approval granted by the Cabinet of Ministers in 08 blocks of lands in various areas of the island owned by the Housing Development Authority, with the participation of local and foreign investors and developers.

 

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THE KINGSBURY - DIVIDEND ANNOUNCEMENT

THE KINGSBURY PLC
Company ID: - SERV
Date of Announcement: - 22.Jun.2016
Rate of Dividend: - Rs. 0.50 per share (Liable to 10% dividend tax) / Second Interim Dividend
Financial Year: - 2015/2016
XD: - 01.Jul.2016
Payment: - 13.Jul.2016
Share Transfer Book Open

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Asia shares pause, sterling stands tall as Brexit vote looms

June 21 (Reuters) – Asian shares got off to a tentative start on Tuesday, as investors paused after a rally triggered by growing expectations that British voters will opt to remain in the European Union in this week’s referendum.

Two of the latest polls released over the weekend showed the “Remain” camp in the lead, reversing a recent rise in support for pulling out and prompting a rally in global equities and the pound on Monday.

“The polls were not supposed to influence as much as they have, but overnight we have seen a rampant position adjustment and an unwind of ‘Brexit’ hedges,” wrote Chris Weston, chief market strategist at IG in Melbourne.

Bookmakers’ odds have also shown “Remain” gaining traction, with Betfair putting the implied probability of such an outcome at 72 percent on Monday, up from 60-67 percent on Friday.

But investors remain wary ahead of Thursday’s vote, as well as Federal Reserve chief Janet Yellen’s two-day testimony before Congress which starts later on Tuesday, in which she might offer clues on the timing of the central bank’s next interest rate increase.

For the latest Reuters news on the referendum including full multimedia coverage, click

MSCI’s broadest index of Asia-Pacific shares outside Japan was narrowly positive in early trading, while Japan’s Nikkei stock index slipped 0.7 percent as the perceived safe-haven yen clawed back some of its losses of the previous session as risk appetite rebounded.

A Reuters poll showed that confidence at Japanese manufacturers inched up in June from the prior month’s three-year low and is seen rising only slightly ahead, reflecting worries about the yen’s rise ahead of the British vote.

The pound edged down 0.1 percent to $1.4666 after it rose as high as $1.4721 on Monday, extending a recovery from last Thursday’s more than two-month trough of $1.4013.

The dollar slipped 0.1 percent to 103.85 yen, moving back toward Thursday’s nearly two-year low of 103.55 hit after the Bank of Japan held policy steady and disappointed investors hoping for more stimulus.

The euro gained 0.1 percent to $1.1324.

Later in the session, Germany’s constitutional court will rule on the emergency bond-buying plan devised by the European Central Bank during the financial crisis. An outright rejection of the programme is viewed as unlikely, but the ruling could potentially upset the ECB’s current programme and roil markets.

Crude oil futures gave back some of their gains after surging 3 percent on Monday as “Brexit” fears waned.

Brent crude shed 0.5 percent to $50.42 a barrel, while U.S. crude was down 0.3 percent, at $49.21.

 

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Sri Lanka's debt higher than B, BB rated countries, Fitch data shows

June 21, 2016 (LBO) – Sri Lanka’s current debt levels are higher than its ‘B’ median peers or the previously rated ‘BB’ median, data from the ratings agency Fitch shows.

Sri Lanka’s external funding requirement too is high compared to peers, although it performs better in certain governance metrics and HDI indices. Supporting the rating, however, Sri Lanka has the potential to receive higher FDI due to the ease of doing business.

These points were discussed at the Sovereign and Corporate Forum organized by Fitch last week in Colombo, with international and local experts attending.

Sri Lanka formerly rated at BB- shared the rating with peers such as Bangladesh and Vietnam. However, the country rating was downgraded to B+/Negative in early 2016. A snapshot of how Sri Lanka stands with others in the region in terms of external liquidity and leverage is given in the chart.

The island is currently facing a larger number of debt maturities and some believe Sri Lanka’s external borrowings could become more expensive.

Associate Director APAC sovereign ratings, Sagarika Chandra of Fitch Ratings, discussed what to expect once the IMF funding program is put in place.

Prior to the IMF funding program hikes in rates lead to a decline in credit growth. But this is expected to pick up post IMF fund, with a lower interest rates, although it would gradually slow down.

Sri Lanka’s budget deficit is higher than its rated ‘B’ median, but Chandra expects this to increase savings in future gradually reducing the overhanging debt levels.

Sri Lanka’s generally favourable GDP growth could slow, but remittance inflows continue at a steady pace along with tourism.

Senior Director and Head of APAC sovereign ratings, Andrew Colquhoun, said Emerging Asia remains the world’s fastest growing region but with unique exposure to China, while also being influenced by the Fed.

“Emerging Asia is hence caught between China and the Fed,” he said.

External factors such as less favourable oil prices and Fed rate hikes are risks to Sri Lanka’s external position.

Sri Lanka’s exports which were two billion dollars in 1990 have increased only to 11 billion dollars as of today, while Vietnam which had lower exports than Sri Lanka in 1990 currently has exports of 100 billion dollars, a panelist pointed out.

In terms of the corporate debt market, panelist Malinga Arsakularatne described how Hemas Holdings PLC had benefited from a rating by an international rating agency such as Fitch Ratings, as it was a learning process that benefited Hemas both directly and indirectly.

Arsakularatne also stated that there are 3 large corporates in Sri Lanka that hold better ratings than local banks, who do not raise debentures, whether for lack of awareness or cultural barriers was left to be debated.

 

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Sri Lanka *market update* USD/LKR 1wk fwd 148.45/55, Stocks flat

USD/LKR one week forward quoted at 148.45/50, Tuesday. The spot is holding at 144.50. (12.30 p.m)

ASPI trading at 6,460.31, down 0.81 points or 0.01 percent with losses in Lanka Orix Leasing and John Keells Holdings, brokers said. 

 

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Asia stocks gain as Brexit fears ebb slightly, pound surges

June 20 (Reuters) – Asian stocks gained early on Monday as rising expectations of Britain voting to remain in the European Union lifted risk sentiment and the pound jumped against its peers.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.4 percent.

Japan’s Nikkei climbed 1.5 percent, helped by a retreat in the recently bullish yen. Australianstocks added 0.3 percent and South Korea’s Kospi rose 1 percent.

Three British opinion polls ahead of the EU membership referendum on June 23 showed the ‘Remain’ camp recovering some momentum, although the overall picture remained one of an evenly split electorate.

Global markets, buffeted this month by Brexit woes, had a breather at end of last week from a three-day suspension in British campaigning following the fatal attack on lawmaker Jo Cox, a strong supporter of Britain staying in the EU.

“It is hard to think the market’s calmer tone to end last week is going to be an ongoing theme this week, particularly as Brexit campaigning and the release of opinion polls has resumed again,” wrote strategists at ANZ.

“To be fair, the sad murder of UK politician Jo Cox may see the rhetoric from both camps get toned down somewhat. But markets will still, no doubt, swing about with movements in opinion polls, just as they did last week.”

The pound meanwhile climbed 1.4 percent to $1.4573, extending a recovery from last week’s two-month trough of $1.4013. It jumped 1.9 percent to 152.50 yen, pulling well away from a three-year trough of 145.34 set on Thursday.

The safe-haven yen, which had soared to a 22-month high of 103.555 per dollar last week on Brexit woes, pulled back.

The dollar was up 0.5 percent at 104.650 yen. The euro rose 0.5 percent to $1.1336.

The Australian dollar, seen as a rough measure of risk sentiment, was up 0.4 percent at $0.7422 to put further distance between a two-week trough of $0.7286 touched late last week.

The dollar index touched an 11-day low of 93.696 early on Monday as the greenback gave back ground against most of its major peers, apart from the yen.

Dovish comments from St. Louis Fed President James Bullard on Friday also weighed on the U.S. currency.

In commodities, crude oil prices extended gains as easing Brexit worries and a weaker dollar helped the commodity after six straight days of declines.

U.S. crude gained 0.6 percent to $48.27 a barrel and Brent crude was up 0.55 percent at $49.44 per barrel.

 

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Sri Lankan rupee 1-wk forwards weaker on importer dlr demand

June 20 (Reuters) – Sri Lankan rupee one-week forwards traded weaker on Monday due to importer dollar demand while dealers said the rupee was under pressure due to lack of exporter dollar conversions amid moral suasion by the central bank .

One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee in the absence of trade in three-day forwards on Monday, were at 146.00/30 per dollar at 0527 GMT, weaker from Friday’s close of 145.90/146.10.

“The (dollar) demand is there. But there are no sellers in the market and the moral suasion is there,” a currency dealer said, asking not to be named. Dealers said the market is confused with the central bank intervention in both spot rupee and forwards.

Foreign exchange reserves have been falling as the central bank is selling dollars to defend the currency amid some debt repayments, the dealer said.

Central bank officials were not available for comment. The central bank reduced the spot rupee’s peg to 144.50 per dollar on Thursday, from 144.75 in the previous session.

The spot rupee was not actively traded for a fifth straight session on Monday, dealers said. On June 13, the spot closed at 144.85/95 per dollar.

The spot rupee has been pegged down from 145.75 levels in early June after the local currency rose following increased dollar conversions by exporters and overseas funds.

For a third straight day, there was no active trading in three-day dollar/rupee forwards, known as spot next, dealers said.

The forwards closed at 144.85/90 per dollar on Wednesday. Spot next, which has acted as proxy for the spot currency since January, indicates the exchange rate for the day following conventional spot settlement.

For Monday’s trade, the spot next settlement takes place three days ahead. Foreign investors net bought 6.67 billion rupees ($46.06 million) worth of government bonds in the week ended June 15, central bank data showed.

A lack of large inflows from exporters, and borrowings were weighing on the currency, dealers said.

 

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