The Colombo Stock Exchange (CSE) on Saturday announced a five-day trading halt after crisis-hit Sri Lanka hiked interest rates and declared a default on its external debt during the traditional New Year holiday.

The market was due to reopen on Monday after being shut all week for the occasion, but the CSE said it will remain closed from Monday to Friday due to the "present situation in the country."

The move came ahead of Sri Lanka's planned talks with the International Monetary Fund (IMF) in Washington on Monday to negotiate a bailout as the country has run out of foreign exchange to finance even the most essential imports.

Brokers had been expecting shares to be hammered on Monday, after the central bank almost doubled its benchmark interest rate to 14.5% following the close on April 8, the last trading day before the holiday.

Faced with an unprecedented forex crisis, the government on Tuesday declared it was suspending interest and capital payments on its huge foreign debt.

The CSE said that regulators believed it was in the best interest of "market participants if they are afforded an opportunity to have more clarity and understanding of the economic conditions."

The island nation is grappling with its worst economic downturn since independence in 1948, with regular blackouts and acute shortages of food and fuel in addition to record inflation.

The CSE's All Share Index has shed over 38% in the past three months, while the Sri Lankan rupee has fallen by more than 35% against the U.S. dollar in the past month.

The crisis has caused widespread misery for Sri Lanka's 22 million people and led to weeks of anti-government protests.

Thousands of people were camping outside President Gotabaya Rajapaksa's office for the eighth straight day Saturday, chanting "Go home Gota."

Sri Lanka had sought debt relief from India and China, but both countries instead offered more credit lines to buy commodities from them.