Colombo, Nov 06: If not resolved quickly, the political crisis in Sri Lanka is likely to further upset financial markets and jeopardise the country's fragile economic recovery, economists said today. Colombo's all share index fell 13 percent and the Sri Lankan rupee hit a high of 95.70 to the US Dollar yesterday, against 94 rupees last week.

"Investor confidence is gone ... The uncertainty is bad for markets," Ravi Abeysuriya of Fitch ratings Lanka told Dow Jones newswires of the ongoing power struggle between President Chandrika Kumaratunga and Prime Minister Ranil Wickremesinghe.

"The market is going to remain very volatile," said Janaka Palapathwala, a senior manager at Conglomerate Ceylinco

The President this week has sacked three cabinet ministers, suspended parliament for two weeks, deployed troops around the capital and ordered a 10-day state of emergency. Her actions undermined the Prime Minister while he was on an official visit to the United States.


Bureau Report