Sri Lanka plans to reduce limit foreign holdings of govt securities

<p>After weeks of political crisis and a falling rupee due to foreign outflows, Sri Lanka announced this week it intends to further limit foreign holdings of government securities to 5 percent, down from the current 10 percent.&nbsp;</p> <p>"In view of the increased volatility in global financial markets, we also intend to reduce the threshold for foreign investment in rupee denominated government securities from 10 percent of the outstanding government securities stock at present to 5 percent," the Central Bank of Sri Lanka Governor Indrajit Coomaraswamy was quoted by Reuters as saying.&nbsp;</p> <p>"All that has elevated uncertainty. In such a context, foreign institutional investors, that is foot loose money, goes in and out very fast. Those are the people we gave this 10 percent limit. Now with a much more volatile global financial context, its better not to have as much exposure," he added.&nbsp;</p> <p>Sri Lanka lost around $1 billion in foreign outflows in 2018, with 42 percent of this total being in the two months of political turmoil following the president's sacking of the prime minister and attempt to dissolve parliament. &nbsp;</p>