ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange (CSE) will soon allow listed companies to sell foreign currency denominated shares as long as they have revenues in foreign exchange according rules which has been approved by the regulator.
The CSE’s new move, which was approved last week by the regulator Securities and Exchange Commission (SEC) will allow Sri Lankan companies seeking to fund foreign currency to raise capital in foreign currencies a CSE official said.
“Companies which have earned over 50 percent of their revenue in foreign currencies in the last three years with a minimum revenue of 5 million US dollars are eligible to use this option,” the official said.
Non-residents and resident foreign nationals would be among those allowed to buy the shares.
At the moment companies can sell only rupee denominated shares to foreign investors, who convert the dollars at banks before giving the company.
The move comes as foreign investors are exiting rupee denominated stocks as the exchange rate is severely pressured and sovereign default risk has also been elevated by money printed to keep interest rates down.
The central bank has also said it wants “non-debt inflows”.
Though the central bank has fixed the exchange rate at around 200 rupees per dollar, the US currency is sold at around 250 rupees in the grey market due to pressure created by printed money and a confidence hit.
Sri Lanka is unable to tap international capital market for foreign currency loans as global rating agencies have downgraded its credit rating to ‘CC’ or barely above default. (Colombo/Feb19/2022)
its like zimbabwe, sri lanka ruppee will suffer,as it will be not a legal accepted tender