Foreigners buy Sri Lanka rupee bonds; extend 2025 net inflow to USD 234.4 million

Foreign investors acquired approximately USD 3 million worth of Sri Lankan government securities in the week ending January 1, according to data from the Central Bank. This inflow extends the net overseas investments in these risk-free fixed assets to USD 234.4 million.

This marks the 13th week in the last 18 weeks that foreign investors have purchased rupee bonds, bringing foreign holdings in government securities to a near 26-month high. Specifically, investors bought a net 938 million rupees (USD 3.07 million at an exchange rate of 1 USD = 305 rupees) during the week, defying the global trend of capital outflows.

While global bond funds experienced net outflows of USD 1.97 billion, marking their first weekly sales since April 16, they have still attracted net inflows of USD 891.74 billion in 2025, following USD 1.05 trillion in net inflows in 2024. Short-term bond funds, however, saw withdrawals of approximately USD 5.23 billion after a substantial net purchase of USD 10.16 billion the previous week.

Sri Lanka has benefited from a total inflow of approximately 71.5 billion rupees (around USD 234.4 million) into rupee bonds in 2025. The recent buying spree comes as global investors seek safe-haven assets such as gold following a Federal Reserve rate cut early last month, with further rate reductions anticipated.

Over the past 18 weeks, the island nation has recorded net inflows totaling 34,793 million rupees (USD 113.7 million). However, Sri Lanka experienced an outflow of 10.1 billion rupees (USD 32 million) in the two weeks following Donald Trump’s tariff announcement in the first week of April, which caused a slight depreciation of the rupee.

Analysts attribute the continued inflows to Sri Lanka’s deflationary policies, which have been effective in curtailing imports. Despite facing foreign outflows amounting to 48.2 billion rupees in 2024, with 66 percent, or 78.1 billion rupees, of these outflows occurring in the government securities sector during the first nine months of last year, the country has managed to attract substantial investments. (Colombo/January 03/2026)