ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange (CSE) will soon allow listed companies to sell shares denominated in foreign currencies as long as they have foreign currency earnings under rules approved by the regulator.
The new CSE decision, which was approved by regulator Securities and Exchange Commission (SEC) last week, will allow Sri Lankan companies seeking foreign currency funding to raise foreign currency capital, a CSE official said. .
“Companies that have earned more than 50% of their revenue in foreign currency over the past three years with a minimum revenue of US$5 million are eligible to use this option,” the official said.
Non-residents and resident foreign nationals would be among those permitted to purchase the shares.
At present, companies can only sell shares denominated in rupees to foreign investors, who convert the dollars in banks before giving to the company.
The move comes as foreign investors are abandoning rupee-denominated stocks as the exchange rate is under severe pressure and the risk of sovereign default has also been heightened by money being printed to keep interest rates low.
The central bank also said it wanted “non-debt inflows.”
Although the central bank has pegged the exchange rate at around 200 rupees to the dollar, the US currency is selling at around 250 rupees in the gray market due to the pressure created by printed money and a lack of confidence.
Sri Lanka is unable to tap into the international capital market for foreign currency lending as global rating agencies have downgraded its credit rating to “CC” or just above default. (Colombo/February 19, 2022)