Sri Lanka declares a 5-day freeze on stock trading due to the crisis

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Colombo (AFP) – The Colombo Stock Exchange on Saturday announced a five-day halt to trading after crisis-hit Sri Lanka hiked interest rates and declared a default on its external debt during the traditional Lunar New Year holiday.

The market was due to reopen on Monday after being closed all week for the occasion, but the CSE said it would remain closed Monday to Friday due to the “current situation in the country”.

The move comes ahead of Sri Lanka’s scheduled talks with the International Monetary Fund in Washington on Monday to negotiate a bailout as the country has run out of foreign exchange to fund even its key imports.

Brokers had expected stocks to come under pressure Monday after the central bank nearly doubled interest rates to 14.5 percent after the close on April 8, the last trading day before the holiday.

Amid an unprecedented foreign exchange crisis, the government announced on Tuesday that it was suspending interest and principal payments on its huge external debt.

The CSE said regulators believe it is in the best interests of “market participants” to “give them an opportunity to gain greater clarity and understanding of economic conditions.”

The island nation is grappling with the worst economic downturn since independence in 1948, with regular blackouts and acute food and fuel shortages and record inflation.

The CSE’s All Share Index is down over 38 percent over the past three months, while the Sri Lankan rupee has fallen more than 35 percent against the US dollar over the past month.

The crisis has brought widespread misery to Sri Lanka’s 22 million people and sparked weeks of anti-government protests.

Thousands of people camped outside President Gotabaya Rajapaksa’s office for the eighth consecutive Saturday, chanting “Go home Gota”.

Sri Lanka had asked India and China for debt relief, but both countries instead offered more credit lines to buy commodities from them.

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