News & market updates

IEA warns global commercial oil inventories are depleting very fast amid Middle East supply disruptions; member countries have coordinated releases of 426 million barrels from emergency reserves, with about 164 million barrels already drawn down. Airlines warn of possible jet fuel shortages ahead of the northern hemisphere summer travel season as tanker traffic through the Strait of Hormuz is disrupted.

Sri Lanka's services sector contracted in April 2026, with the CBSL PMI falling to 46.7 from 59.4 the previous month, driven by higher fuel prices, post-festive seasonal slowdown and weaker tourist arrivals.

Deputy Finance Minister Anil Jayantha urged Sri Lankans to cut fuel use as higher oil imports and four rounds of price hikes (~40% since Feb 28) are putting depreciation pressure on the rupee; the state fuel retailer spent $1bn on imports in the first four months versus $1.5bn for full year 2025.

Asian stocks fell as drone attacks in the Gulf pushed Brent above $111/bbl and global bond yields higher (US 10-year ~4.63%), raising inflation and tightening risks; Nvidia and major retail earnings this week will test equity resilience.

Gold fell to a 1.5-month low as Middle East tensions lifted oil, raising inflation fears and higher-for-longer rate expectations; spot gold was down 1.1% at $4,488.99/oz. Markets see about a 50% chance of a Fed hike by December, and India curbed silver imports to ease rupee pressure.

Sri Lanka is likely to record a small current account deficit in 2026, the Central Bank said, as higher global crude prices push oil import bills above inflows. The country had posted surpluses from 2023–25 supported by tourism receipts and remittances.

The state-owned Ceylon Petroleum Corporation spent nearly US$1 billion on oil imports in the first four months of the year — about two-thirds of its full-year 2025 bill of US$1.5 billion. The Central Bank governor said this is boosting foreign-exchange demand as fuel is being imported at higher prices after the Middle East escalation.

Central Bank Governor told Parliament that increased imports—especially petroleum by the state fuel retailer—and slower tourism have pressured foreign exchange, contributing to a 4.5% fall in the rupee through May 15. He said oil import bills rose sharply while exports have not kept pace, though remittances are holding up.

Amana Bank (ABL.N0000) reported Q1 2026 PBT of Rs.0.8bn (+14% YoY) and PAT of over Rs.0.5bn (+16% YoY). Net financing income rose to Rs.2.2bn (+14%), total operating income to Rs.2.7bn (+13%), CASA 44%, CET1 13.2%, and Stage 3 NPA 1.2%.

Treasury Bond auction accepted weighted-average yields in line with or below expectations but was undersubscribed, raising Rs.176.62bn of Rs.250bn offered. Stronger fiscal data (Feb revenue +35.5% YoY; primary surplus +66.1%) supported bond-market resilience while USD/LKR traded 321.90–326.00 and T-bill yields eased.

The Sri Lankan rupee weakened, with the Central Bank's USD selling rate at Rs. 331.15 and buying rate at Rs. 323.53 on 15 May — the weakest selling rate since Dec 2023 — extending depreciation amid global shipping, energy and fertiliser shocks.

The government is considering ending the odd-even fuel distribution system and increasing fuel quotas, saying fuel stocks are sufficient until August 2026 and supplies are being secured for the rest of the year. Officials also discussed appointing Energy Managers, boosting renewable energy and introducing Green Building measures under the Clean Sri Lanka program.

IMF expects its Executive Board to consider Sri Lanka’s combined Fifth and Sixth EFF reviews within weeks, a move that could unlock about $700 million for the country. The review requires prior actions including restoring cost‑reflective electricity and fuel pricing with social protections; the IMF noted reform gains amid recent shocks and said debt restructuring is nearing completion.

Sri Lanka Telecom PLC reported 1Q2026 consolidated revenue of Rs.30.8bn (up 10.6% YoY) and PAT of Rs.3.1bn (up 53.3%), driven by broadband demand; SLT PLC standalone revenue was Rs.19.7bn with PAT of Rs.2.1bn, supported by cost efficiencies and FX gains.

IMF reaffirmed that restoring cost recovery for electricity and fuel pricing is a required prior action for completing Sri Lanka’s Fifth and Sixth Reviews under the EFF; authorities must implement a two-part strategy while protecting vulnerable groups.

The Sri Lankan rupee has fallen more than 5% so far this year, risking higher inflation and possible monetary tightening that would raise borrowing costs; rising import, fuel and medicine prices threaten household purchasing power and could drag on growth.

SLT‑MOBITEL reported Q1 2026 group revenue up 10.6% to LKR 30.8 billion and profit after tax up 53.3% to LKR 3.1 billion. SLT PLC revenue was LKR 19.7bn (+10.6%); Mobitel revenue rose 9.9% with broadband revenue up 28%.

Central Bank governor Nandalal Weerasinghe said the rupee's recent depreciation reflects global market trends rather than domestic mismanagement and that the CBSL intervenes to prevent excessive swings; the rupee closed around 326.00/327.00 to the dollar.

CBSL Governor Nandalal Weerasinghe said the central bank's mandate is limited to preserving price and financial stability and it will not promote economic growth, productivity or FDI. He added policy (including interest-rate) decisions will be data-driven and reserve targets under the IMF program may be revised given external risks such as the Middle East conflict.

President Anura Kumara Dissanayake said Sri Lanka's oil import bill rose from $98m in February to $216m in March and $368m in April, with May projected at $522m, increasing FX outflows and subsidy costs. He noted diesel costs ~Rs.720/L but is sold at Rs.392 (CPC receives Rs.492), with CPC losses of Rs.84bn moved to the Treasury and electricity tariffs under pressure.

Treasury Bill auction was fully subscribed, raising Rs.80 billion and saw yields decline to 8.13% (91-day), 8.23% (182-day) and 8.49% (364-day). Secondary bond yields later edged up on profit-taking, money-market liquidity surplus was Rs.255.68bn and USD/LKR closed at 324.00/325.50.

CBSL Economic Research Director Dr. Lasitha Pathberiya warned prolonged Middle East conflict and rising global volatility threaten growth and government revenue, urging sustained structural reforms and stronger fiscal and external buffers. He noted 5% growth in 2025, improved financial-sector metrics, and a likely wider 2026 trade deficit.

Cabinet approved about Rs.112.44 billion in Treasury-funded contracts for Central Expressway Phase II, awarding Access Engineering a Rs.18.7 billion package. Seven local contractors won packages covering 18.65 km of the expressway, fully government-financed.

Colombo market ended marginally higher as the ASPI closed up 0.02% at 23,015.32 with turnover near Rs.3.7bn and foreign net outflows of Rs.361.3m; MELS.N0000, RIL.N0000, CIC.N0000, BUKI.N0000 and CARG.N0000 were among the leading positive contributors. Investors stayed cautious amid escalating US‑Iran tensions and rising oil prices.

ANC Campus hosted a dialogue with Hayleys' executive director and Janashakthi's CEO on geopolitical risks and private-sector resilience; the University of West England will open its first Sri Lanka branch campus in June. Speakers urged firms to adopt AI, diversify exports and streamline approvals to attract investment.

Foreign investors sold a net US$4.06 million (1,280 million rupees) of Sri Lanka government rupee bonds in the week to May 7, central bank data showed. The outflow brings total foreign investment into rupee bonds to 1,366 million rupees in the first 18 weeks of 2026, down sharply amid depreciation pressure and higher fuel-driven inflation.

Oil prices rose about 1% as fragile U.S.-Iran talks kept supply concerns alive; Brent was $105.07/bbl and WTI $99.06. Tensions around the Strait of Hormuz, OPEC output near multi-decade lows and forecasts of U.S. stock draws supported the gains.

The Government approved an 18% electricity tariff increase for Q2–Q3 2026, saying it directly affects 7.29% of electricity users (4.06% of households) and has committed a Rs.15 billion subsidy to the National System Operator to cushion rising generation costs.

The Indian rupee fell to a record low of 95.6250 per USD as Brent crude surged ~46% after the Iran conflict, prompting central bank intervention and contributing to more than $20bn of equity outflows so far.

PM Modi urged Indians to curb fuel use, revive working-from-home, pause gold purchases and cut overseas travel to conserve foreign exchange as global oil prices rose (Brent $105.33/bbl, WTI $99.85/bbl) amid Iran war-driven Middle East tensions.