Sri Lankan stocks were slightly weaker in low-volume trade on Friday as investors continued to be cautious due to political uncertainty ahead of the January 8 presidential poll.

At 0712 GMT, the main stock index was down 0.07 per cent at 7,238.19.

The central bank kept key policy rates steady at record lows for an eleventh straight month on Friday as expected, saying past policy measures have helped achieve the economic growth target of 7.8 per cent for this year.

“Very low trade and nothing much is happening. Interest is not there, trading is very low with huge drop in retail activity ahead of holidays and elections,’’ said Dimantha Mathew, manager research, at First Capital Equities (pvt) Ltd.

Stock brokers expect the market to remain sluggish until investors see clear direction on the political front.

Presidential election

Nineteen candidates, including President Mahinda Rajapaksa and former Health Minister Mithripala Sirisena, the consensus candidate of a united Opposition, submitted their nominations for the polls.

Eleven loyalists from Rajapaksa’s United People's Freedom Alliance, including Sirisena, defected after he announced snap elections last month.

Speculation over more defections also weighed on the sentiment, analysts said.

Turnover stood at 415.7 million Sri Lankan rupees ($3.17 million), with 9.72 million shares changing hands.

Rupee forwards

Four-day rupee forwards traded steady as mild importer dollar demand offset greenback sales by exporters, dealers said.

The spot currency and three-day forwards, or spot-next, were not traded after the central bank capped the currency at predetermined levels to prevent volatility.

Central bank officials were not available for comment.

Dealers said four-day forwards traded steady at 131.96/132.00 per dollar at 0739 GMT, compared with Thursday's close. ($1 = 130.9500 Sri Lankan rupees)

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