Sri Lanka stock exchange to shut for 5 more days

COLOMBO • The Colombo Stock Exchange (CSE) has announced a five-day trading halt after crisis-hit Sri Lanka hiked interest rates and declared a default on its external debt during the traditional New Year holiday.

The market was due to reopen tomorrow after being shut all week for the occasion, but the CSE said the exchange will now remain closed until Friday due to the "present situation in the country".

The board of directors of the stock exchange, along with other stakeholders, had sought a temporary closure of the market, the Securities and Exchange Commission of Sri Lanka (SEC) said in a statement yesterday.

"The SEC has carefully considered the grounds that have been adduced by them and has evaluated the impact the present situation in the country could have on the stock market, in particular the ability to conduct an orderly and fair market for trading in securities."

A Sri Lankan team is headed to Washington, looking to secure up to US$4 billion (S$5.4 billion) from the International Monetary Fund and other lenders to help the island nation pay for food and fuel imports and limit debt defaults.

The country is in political turmoil, with street protests against President Gotabaya Rajapaksa.

The US$81 billion economy faced US$8.6 billion worth of debt obligations this year before it suspended payments on foreign loans to preserve cash to pay for essential food and fuel imports.

Brokers were expecting shares to be hammered tomorrow, after the central bank almost doubled its benchmark interest rate to 14.5 per cent following the close on April 8, its last trading day before the holiday.

"It would be in the best interests of investors and other market participants if they are afforded an opportunity to have more clarity and understanding of the economic conditions prevalent, in order for them to make informed investment decisions," the SEC said.

AGENCE FRANCE-PRESSE, BLOOMBERG