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S.Lanka shares up on war-end hope amid UN concerns

[Reuters, Thursday, 14 May 2009 12:29 No Comment]

Sri Lanka shares .CSE gained on Thursday on hopes of an end to a 25-year war against Tamil Tiger separatists, while the rupee <LKR=> edged down on a speculated delay in a $1.9 billion International Monetary Fund (IMF) loan.


The Colombo All-Share index .CSE rose 0.75 percent or 13.97 points to 1,884.42, its first rise after falling in two sessions. "Investors believe the war will end soon and then the bourse will have a boom," said Shivantha Meepage, a research analyst at Acuity Stockbrokers.


Fighting in Sri Lanka’s war, in which rebels are facing an imminent defeat, showed no signs of abating on Thursday despite strong words U.N. Security Council, with both sides refusing to budge in the waning days of a 25-year conflict. [ID:nCOL398032] Shares in top mobile phone operator Dialog Telekom DIAL.CM fell 5 percent to 5.25 rupees, calculated on a weighted average, while heavily traded top listed private lender Commercial Bank of Ceylon COMB.CM rose 0.8 percent to 94.50 rupees.


Turnover was 174.4 million rupees ($1.48 million), less than a half of last year’s daily average of 464 million rupees.


The rupee edged down to 117.70/90 a dollar, from Wednesday close of 117.65/75. It 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.


A state bank, through which the central bank usually directs the market, bought dollars at 117.80 rupees, a currency dealer said. "The market is concerned on uncertainty of the IMF loan."


The central bank on Wednesday said Sri Lanka has maintained an unblemished record of debt servicing and was disturbed by British Foreign Secretary David Miliband’s statement.


Miliband on Monday raised doubts about whether Sri Lankan government could be trusted to use a $1.9 billion loan from the IMF appropriately. [ID:nN11548652]

Though U.S. officials have said Washington wanted to delay the loan, the U.N.

Security Council has said it should not be used as part of any punishment.

[ID:nSP278610] [ID:nN29549850]

Analysts say though some countries tried to delay the IMF loan after Sri Lanka refused a truce in an apparent final fight against Tamil Tiger rebels, Sri Lanka could still survive without IMF money due to donor funds for post-war development.


Economists say the loan process is still under progress and nobody should speculate until IMF announced it officially.


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 interbank lending rate or call money rate CLIBOR edged down to 10.753 percent from Wednesday’s 11.023.

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