FINANCIAL CHRONICLE – Data from the Central Bank indicates that foreign investors divested over US$4 million from Sri Lankan government securities during the week ending May 7, amidst increasing depreciation of the local currency.
Foreign entities reported a net sale of 1,280 million rupees (equating to approximately US$4.06 million at an exchange rate of 1$=315 rupees) for the week.
This recent outflow brings the total foreign investment in rupee-denominated bonds to 1,366 million rupees over the first 18 weeks of this year, a significant decline from the 21,863 million rupees recorded in the initial six weeks.
On a global scale, investors are exhibiting heightened caution regarding economic growth, influenced by the ongoing conflict in the Middle East.
Last year, the island experienced a total inflow of around 71.5 billion rupees (approximately US$234.4 million) into rupee bonds.
Experts suggest that Sri Lanka’s deflationary measures aided in attracting investments, particularly as imports have been limited.
However, the country faced a notable rise in inflation last month, which followed a more than 35 percent increase in fuel prices. Analysts believe that this surge in inflation expectations has exerted pressure on the Central Bank’s monetary policy.
Since May of the previous year, Sri Lanka’s central bank has maintained its key policy rates, having reduced them by 825 basis points over a 24-month period starting June 2023, while foreign investors continued to purchase rupee bonds despite the depreciation of the local currency. (Colombo/May 12/2026)
