Sri Lanka suspends stock trading twice amid growing economic crisis


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.

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