Sri Lanka suspends stock trading twice amid growing economic crisis

0

Stock trading in Sri Lanka was halted twice on Wednesday after a gauge of blue-chip stocks fell more than 8%, underscoring a mounting economic crisis caused by a shortage of dollars and runaway inflation.

The benchmark Colombo All Share Index was down 2.7% at 11,285.37 after a one-measure drop in the country’s top 20 stocks by market capitalization triggered a circuit breaker. The exchange suspended trading for 30 minutes twice, first when the gauge fell 5% and then when it fell more than 7.5%.



“Macro concerns are increasing. There are margin calls and forced selling,” said Udeeshan Jonas, chief strategist at CAL Securities in Colombo. “Companies’ ability to pass costs on to customers is diminishing.”

A spike in energy prices as tensions around Ukraine escalate have added to the woes of Sri Lanka, which is already facing the fastest pace of inflation in Asia while grappling with the decline in foreign exchange reserves which raised concerns about the risk of default.

Sri Lanka’s central bank on Tuesday released dollars to pay for diesel imports for at least the second time this year, Governor Ajith Nivard Cabraal said.

Corporate earnings face a series of headwinds as currency issues squeeze inventories and production, while rising oil prices hit costs, CAL’s Jonas said.

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor

Share.

Comments are closed.