FINANCIAL CHRONICLE – In the week ending July 16, foreign investments in Sri Lankan rupee bonds reached a new high, marking the most significant level in nearly three years. According to data from the Central Bank, offshore investors acquired a net total of US$23.2 million in government securities, coinciding with a period of rupee stability.
During this week, foreign purchases amounted to 7,666 million rupees (approximately US$23.2 million, based on an exchange rate of 1 USD = 330 rupees), which elevated the overall foreign ownership of rupee bonds to 176,561 million rupees—the highest level recorded since July 27, 2023.
This recent influx has brought the total foreign investment in rupee bonds for the year to US$106.6 million. Over the past four weeks, the country has experienced a net inflow exceeding Rs.55.2 billion (around US$167.2 million) as the rupee showed signs of stabilization.
Earlier, the rupee had depreciated to a selling rate of 354 against the U.S. dollar on May 21 before recovering to around 340. After a prolonged period of stability, this depreciation was attributed to increased imports of oil and vehicles amidst ongoing geopolitical tensions in the Middle East. As of July 16, the rupee had declined by 7.8 percent this year.
Globally, investor sentiment remains cautious regarding economic growth, particularly due to the recent escalation of conflicts in the Middle East. Last year, Sri Lanka saw a total of inflows of approximately 71.5 billion rupees (around US$234.4 million) into rupee bonds.
Analysts have noted that Sri Lanka’s previous deflationary policies facilitated these inflows while imports were curtailed. However, in the past three months, the country has experienced a rise in inflation, partly due to a nearly 50 percent increase in fuel prices.
The government took steps to reduce fuel prices in the final week of June. In response to inflationary pressures from heightened demand, the Central Bank raised its key monetary policy rate by 100 basis points in May.
Prior to the rate hike in May, the Central Bank had maintained its policy rates since May 2025, following a cumulative reduction of 825 basis points over a 24-month period starting in June 2023. Despite the slight depreciation of the local currency, foreign investors have continued to show interest in rupee bonds. (Colombo/July 19/2026)
