Colombo Stock Exchange to remain closed as Sri Lanka battles forex crisis

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Colombo: The Colombo Stock Exchange will remain temporarily closed for a week from Monday to provide investors with the opportunity to have “greater clarity and understanding” of the current economic conditions in crisis-stricken Sri Lanka, which would help them “to make investment decisions enlightened”, it was announced on Saturday. .

“The stock market will remain temporarily closed for a period of five business days from April 18, 2022,” the Securities and Exchange Commission of Sri Lanka (SEC) said in a press release.

Sri Lanka is facing its worst economic crisis since gaining independence from the United Kingdom in 1948. The economic crisis has also sparked political unrest in the island nation with citizens staging nationwide street protests for weeks on long power cuts and a shortage of fuel, food and other daily essentials and demanding the ousting of President Gotabaya Rajapaksa.

The board of directors of the Colombo Stock Exchange (CSE) in a communication on Friday called on the SEC to temporarily shut down the stock market citing the current situation in the country, according to the statement.

Many other securities market players, including the Colombo Stock Brokers Association, have also called for the market to be temporarily closed on the same grounds.

The SEC said it carefully considered the reasons given by it and assessed the impact that the current situation in the country could have on the stock market, in particular the ability to operate an orderly and fair market for securities trading.

“The SEC believes that it would be in the interest of investors as well as other market participants if they were given the opportunity to have more clarity and understanding of the economic conditions that currently prevail, so that they can make informed investment decisions,” the statement read.

Therefore, acting in accordance with the relevant provisions, the SEC decided to order the CSE to temporarily close the stock market for a period of five business days from April 18, it said.

Sri Lanka is on the brink of bankruptcy, struggling with dwindling foreign exchange reserves and $25 billion in external debt to be repaid over the next five years. Nearly $7 billion is due this year alone.

The government announced on Tuesday that it was suspending foreign debt repayments, including bonds and government-to-government borrowing, pending the completion of a loan restructuring program with the International Monetary Fund (IMF).

President Rajapaksa has defended his government’s actions, saying the currency crisis was not his fault and that the economic downturn was largely due to the pandemic due to the island nation’s tourism revenue and dwindling tourism revenues. incoming remittances.

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