(Reuters) – Sri Lanka’s stock market halted trading for 30 minutes on Thursday, the third such suspension in two days, after an index tracking leading companies dropped by over 5%, the Colombo Stock Exchange (CSE) said in a statement.
The island nation of 22 million is facing its worst economic crisis in decades, with severely depleted foreign exchange reserves stalling the imports of essentials including fuel, leading to power cuts of up to 13 hours across most parts of the country.
At the request of stock brokers, the CSE said on Thursday it would restrict trading to two hours, instead of the usual four-and-a-half hours, for the rest of the week due to power cuts.
The market slid after trading opened.
“Concerns on the macro side, together with news of shorter trading hours plus increased power cuts is driving negative sentiment,” said Roshini Gamage, an analyst at brokerage firm Lanka Securities.
“Overall weak sentiment is driving the drop in the market,” Gamage said.
The CSE halted trading twice on Wednesday as worries over the economic crisis deepened and power cuts rippled across the country.
The prolonged power cuts have been partly caused by the government’s inability to pay $52 million for a 37,000 tonne diesel shipment that was awaiting offloading at Sri Lanka’s main port of Colombo.
The ongoing crisis is result of badly-timed tax cuts and the impact of the pandemic, coupled with historically weak government finances, leading Sri Lanka’s foreign exchange reserves to drop by 70% in the last two years.
The country was left with reserves of $2.31 billion as of February, pushing the government to seek help from the International Monetary Fund.