INSIDE SRI LANKA: First Capital Sees LKR Weakening Through 2017

Wire: Bloomberg First Word (BFW) Date: Dec 28 2016 9:32:12

Bloomberg_logo

By Anusha Ondaatjie
(Bloomberg) — Reduced political, economic uncertainty and an external environment supportive of inflows are factors required to amend expected weakness, Dimantha Mathew, head of research at First Capital, writes in report.

* Says foreign reserves dangerously low
* Rupee down 0.1% to 149.65/dollar; USD/LKR’s MACD above zero and signal line
* Yield on 10.75% govt bonds due March 2021 fell 7bps to 12.08% on Dec. 27, data compiled by Bloomberg show, ahead of Wednesday’s govt sale of 11.5b rupees of treasury bills
* Sri Lankan interest rates to be volatile “within 150bps-200bps strip” over Jan.-July 2017: First Capital
* Recommends investing in shorter tenors of debt to counter risk in the system and prevent capital erosion

To contact the reporter on this story:
Anusha Ondaatjie in Colombo at anushao@bloomberg.net
To contact the editors responsible for this story:
Tan Hwee Ann at hatan@bloomberg.net Shikhar Balwani