News & market updates

Sri Lanka's Central Bank raised the Overnight Policy Rate by 100 basis points and said it could use additional instruments to maintain price stability; the rupee had reached a three-year high of LKR 354/USD but has since stabilised.

Sri Lanka's rupee closed at 324.00/325.50 to the US dollar, firming from 325.50/327.00. Local government bond yields rose across maturities, with the 15.09.2027 bond at 9.90/10.40% and the 15.06.2034 bond at 11.50/12.00%.

Former CBSL Governor Indrajit Coomaraswamy said recent rupee depreciation was driven mainly by external shocks from the Middle East conflict and amplified by market overreaction, noting usable reserves have risen to about $5.3 billion. He warned inflation has risen from 2.2% to 5.4% and the Monetary Policy Board may tighten policy if inflation breaches the target band.

The Ceylon United Business Alliance urged the President and Finance Minister to impose a temporary ban on non-essential imports to protect USD reserves, saying restricting apparel imports alone could save about $75–150m per month. It named priority consumer sectors (apparel, footwear, tiles, plastics, processed food, furniture) while asking essential and tourism-related imports to continue.

The Sri Lankan rupee strengthened for a second session, with interbank spot at Rs. 325.50/Rs. 327.00 (from Friday's Rs. 329.00/Rs. 335.00) and TT rates easing to Rs. 326.01/Rs. 336.42. Analysts say external buffers, expected CBSL rate hikes and easing oil prices reduce the risk of a renewed BOP crisis; CBSL issued an advisory against oversimplified narratives on money printing and exchange rates.

Sri Lanka's central bank hiked rates 100bp to 8.75%; the rupee strengthened to 322.00/323.50 from 325.50/327.00 and bond yields rose, with nearby maturities quoted around 10.10–11.00%.

Central Bank raised the Overnight Policy Rate by 100bps to 8.75%. The board cited supply-driven inflation (5.4% y/y in April) from high global oil prices, stronger credit-driven demand, external pressures including fuel-import driven trade deficits and recent rupee depreciation; reserves stood at USD 6.8bn.

Sri Lanka’s central bank raised the Overnight Policy Rate by 100bps to 8.75% to address rising inflation, credit expansion and external pressures; the statement cited 5.4% y/y inflation in April, high fuel prices, a wider trade deficit and gross official reserves of USD 6.8bn.

Tokyo Cement Group reported Q4 turnover of Rs.17,623mn (+36% YoY) and PAT of Rs.577mn; for FY it posted turnover of Rs.61,011mn (+22%) and PAT of Rs.2,580mn, citing currency depreciation and higher material and fuel costs that weighed on margins.

Hemas Holdings reported a 17.6% rise in profit to Rs 3.03 billion for the March 2026 quarter. Consolidated revenue rose 3.9% to Rs 31.54 billion, with healthcare the largest contributor and a final dividend of Rs 0.75 per share approved.

Sri Lanka's Central Bank urged the public not to be misled by claims it has 'printed money', saying money supply and exchange rates require specialist technical analysis. The statement comes ahead of a monetary policy meeting amid speculation the Bank may tighten policy to support the rupee and curb cost‑push inflation after a fuel price hike.

Sri Lanka's rupee closed at 325.50/327.00 to the US dollar on Monday (from 329.00/331.00 on Friday) while government bond yields fell sharply (e.g. the 15.09.2027 bond quoted at 9.15/50%).

Colombo Stock Exchange closed higher, with the ASPI up 1.98% to 22,364.77, as rupee stabilisation and lower interest rates boosted investor confidence. Ceylon Cold Stores and Hemas posted strong quarterly profits and John Keells declared a final dividend; Dialog, Commercial Bank and Sampath gained while hSenid and Dipped Products fell.

The Central Bank of Sri Lanka has set a maximum LTV of 70% for gold‑secured loans and tightened motor vehicle financing LTVs by 10 percentage points, effective from the 25th; the measures apply to licensed banks, finance companies and leasing firms.

JB Securities CEO Murtaza Jafferjee said Sri Lanka must accept painful economic adjustments to restore external stability, attributing the rupee depreciation to current policy settings and urging market pricing and targeted support instead of broad subsidies.

The Central Bank of Sri Lanka intervened in FX markets and the rupee surged as much as 2.7% on Friday, reversing a nine-day slide and becoming Asia's best-performing currency; CBSL data showed YTD depreciation widened from 4.5% (15 May) to 7.2% (22 May).

Sri Lanka's rupee was quoted at 328.00/335.00 to the US dollar, weaker than on Friday, while bond yields held firm with maturities quoted around 10.20%–11.35%. Exporters feared new surrender rules and interbank markets resumed activity after strong forward selling by exporters.

Sri Lanka's central bank capped loan-to-value for gold-backed credit at 70% and tightened motor-vehicle loan LTVs by 10 percentage points, effective May 25. The measures apply to licensed banks, finance companies and leasing firms (including renewals) as macroprudential steps to curb rapid credit growth and asset-price volatility.

Dr Rohitha Silva has been appointed President of the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL). He is Chairman and MD of idac Ltd and will focus on supporting SMEs, strengthening trade linkages and aiding private-sector recovery amid FX shortages, inflation and high finance costs.

The Central Bank of Sri Lanka introduced a 70% maximum LTV for gold-secured credit and tightened motor-vehicle LTV limits by 10 percentage points, effective 25 May 2026. The measures apply to Licensed Banks, Licensed Finance Companies and Registered Finance Leasing Establishments to curb rapid credit growth and systemic risk.

Foreign investors sold about US$13.9m (4,580 million rupees) of Sri Lanka government securities in the week to May 21 amid depreciation pressure on the rupee. The currency is down over 7% YTD and higher inflation after a ~35% fuel price hike has increased pressure on the central bank ahead of its policy meeting.

President Anura Kumara Dissanayake said Sri Lanka faces external pressures from the Middle East conflict—higher oil and import costs and rupee depreciation—but rejected a repeat of the 2022 collapse, noting Central Bank reserves near $7bn and a $700m inflow expected; he assured no shortages of fuel, gas, milk powder or fertiliser.

Deputy Finance and Planning Minister Dr. Anil Jayantha Fernando defended Sri Lanka's flexible exchange rate and independent monetary policy amid rupee pressure, noting the interbank rate averaged Rs.330/USD (bids Rs.327, offers Rs.332). He warned fuel import costs could hit $521m in May, forecast remittances above $9b and expected IMF tranche approvals.

The Free Trade Zone Manufacturers’ Association urges the government to zero-rate locally supplied inputs to BOI exporters to remove an 18% VAT that currently disadvantages domestic suppliers. They propose a gazette notification under existing VAT law to equalise local and import pricing and help retain foreign exchange.

ITAK MP Shanakiyan Rasamanickam called for a bipartisan national response and proposed expanding Aswesuma, transport subsidies, temporary VAT relief on essentials and measures to stabilise the rupee after it weakened about 6% to Rs.327.60 by 18 May 2026. He also urged curbs on luxury imports, criticised untargeted fuel subsidies and proposed a Sri Lanka Development Fund to boost tourism and FDI.

ASPI fell 4.26% for the week but closed Friday up 0.44% at 21,929.64, with market turnover near Rs.2.2bn and net foreign outflow of Rs.11.6m; top positive contributors were JKH, DOCK, MELS, RICH and SAMP amid cautious investors ahead of the CBSL policy meeting.

Sri Lanka's rupee spot closed at 329.00/331.00 to the US dollar on Friday, recovering from 342.00/350.00 the previous day, while government bond yields fell across multiple maturities.

Sri Lanka imposed a temporary 50% surcharge on customs import duty for new personal vehicles from May 16, and 9,429 letters of credit for vehicle imports were opened on May 18. The surcharge aims to curb imports and protect foreign reserves amid rupee depreciation, higher import costs and excess liquidity concerns.

The IMF Executive Board will consider Sri Lanka's combined Fifth and Sixth reviews under the Extended Fund Facility on Wednesday (May 27). The IMF says authorities have made significant progress restoring macro stability and reserves, while noting renewed external pressures.

Sri Lanka's rupee spot offer was 343.00 to the US dollar on Friday, while government bond yields eased — e.g. the 01.07.2028 bond at 10.35/40% and the 15.12.2029 bond at 10.35/50%.