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Sri Lanka rupee at new life low, stocks fall

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Friday June 22, 7:24 PM

COLOMBO, June 22 (Reuters) - Sri Lanka's rupee fell to a new life low on Friday on importer demand for dollars while shares fell as retail investors sold select stocks citing high interest rates and uncertainty due to renewed civil war, traders said.

The rupee closed at a new all-time low of 111.00/111.02 per dollar, compared to Thursday's close of 110.96/110.99.

"There was some demand for dollars in the market because of importers -- importer related transactions," a currency dealer said.

The rupee, which hit a previous all time closing low of 110.95/111.00 on May 7, has depreciated around 3.36 percent so far this year, after weakening by around 5 percent in 2006.

The Colombo All Share index closed 0.88 percent weaker at 2,588.85 points, a fall of 22.90 points.

The index has fallen around 13.51 percent since March amid escalating war and high interest rates, which have encouraged some investors to turn to fixed deposits and bonds. ADVERTISEMENT

The bourse is down around 5 percent so far this year.

"The market slowed down further with retail and a little bit of institutional select selling," said Prasanna Chandrasekera, assistant manager at John Keells Stockbrokers in Colombo.

"Most investors are holding on on the back of high interest rates and the present uncertainty, waiting for news to decide their direction."

Market heavyweight and leading mobile operator Dialog Telekom fell 2.04 percent to 24.00 rupees, while shares in conglomerate John Keells Holdings closed 0.51 percent weaker at 147.25 rupees.

Shares in leading fixed line telephone operator Sri Lanka Telecom closed unchanged at 37.00 rupees a share. Market turnover was 63.5 million rupees ($0.57 million), well below last year's average daily trading volume of around 400 million rupees.

For daily technical analysis of the Colombo Stock Exchange by Reuters, please go to www.reutersindia.net/sri%20lanka.htm.

Call rates rose to 13.439 percent from 13.375 percent on Thursday as calculated on an average. (US$1 = 111.01 rupees)

http://asia.news.yahoo.com/070622/3/33rgl.html

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