News & market updates

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.

The Government has withheld over $37 million from coal suppliers—$22m in fines and $15m from performance bonds—while investigating losses linked to disputed coal shipments used for power generation. Officials say the final loss figure will be determined after the last shipment is consumed and technical and financial assessments are completed.

Secondary bond yields held broadly steady and activity was subdued ahead of a Rs.250 billion Treasury bond auction on 12 May 2026 across four maturities. Fiscal data showed a stronger primary and overall budget surplus for Feb 2026, USD/LKR closed near 322.00/322.40 and money-market liquidity was a Rs.262.96bn surplus.

Colombo market closed lower as the ASPI fell 0.23% to 23,011.72 despite net foreign inflows of Rs. 597.5m; banking sector led turnover with large SEYB crossings and gains, while COMB, CINS, DFCC and Colombo Dockyard were among top negative contributors.

Sri Lanka recorded a primary surplus of Rs. 545.42 billion in Jan-Feb 2026 (up 66% YoY) and an overall Budget surplus of Rs. 169.71 billion, with revenues rising 35.5% to Rs. 1.03 trillion while expenditure growth was contained at 1.6%.

Sri Lanka's official reserve assets fell $267m to $6.76bn in March, with foreign currency reserves down $295m to $6.54bn; the CBSL was a net seller of dollars in April (net $13m). Predetermined near-term FX obligations total $2.1bn and forward short positions amount to $3.87bn.

Secondary bond yields fell across the curve last week after US–Iran deal optimism improved risk sentiment (e.g., 01.07.28 down from 9.80% to 9.65%, 15.12.29 from 10.10% to 9.95%). The 91- and 364-day T‑Bill yields held at 8.20% and 8.52%, a T‑Bill auction was fully subscribed (aggregate Rs.108.44bn) and a Rs.250bn Treasury Bond auction is scheduled.

The PUCSL approved an 18% electricity tariff rise for consumers using over 180 kWh, effective May 11. The regulator — after a prior 25.3% April hike — ordered the National System Operator to cover coal-shortage extra costs payable to the Electricity Generating Company, and introduced relief for low-use households, EV charging bands, and demand-charge changes for hotels and SMEs.

Secondary bond yields fell sharply after reports of a possible US–Iran deal, with key maturities trading lower (e.g., 01.07.28 at 9.65%; 15.06.29 ~9.90%; 01.10.32 at 10.70%). Money‑market liquidity surplus was Rs.249.98bn and USD/LKR closed at 321.70/321.80.

Colombo market hit a 10-week high as the ASPI rose 1.13% to 22,997.86, a 13.5% rebound from the 19 March low; market turnover was about Rs.5.3bn, foreign investors were net sellers of Rs.22.3mn, and the materials sector led turnover.

Brent fell below $100 to $99.45 and WTI to $93.18 as markets weighed a possible U.S.-Iran deal that could reopen the Strait of Hormuz, with both benchmarks down about 2% amid volatile trade and tightening U.S. crude inventories.

FRED says the state National System Operator has halted payments since Dec 2025, leaving Rs10bn unpaid to renewable SMEs and threatening 389 plants (1,073.9 MW). Developers report scheduled curtailments, seek a Rs10bn Treasury grant and warn of rising bank NPLs and investor flight.

FTZMA urged the PUCSL to operationalise power wheeling under Section 13 of the Electricity Act and publish the regulatory framework and wheeling-charge methodology within 90 days to allow industry to buy renewable power via the grid, reduce fuel imports and save foreign exchange.

The weekly Treasury Bill auction was fully subscribed, raising Rs.100 billion in Phase I with the 91-day WAYR at 8.20% and the 364-day at 8.52% (182-day 8.24%). Market liquidity rose to Rs.254.52bn and USD/LKR closed around 320.20/321.00.

FRED warns the National System Operator has halted payments to renewable generators since Dec 2025, creating LKR 10 billion in unpaid dues as of April 2026 and threatening sector collapse without immediate government/Treasury intervention. FRED says payments are being prioritized to expensive fossil-fuel plants (thermal costs near LKR 100/kWh), risking plant shutdowns, investor flight and higher bank NPLs.

Asian stocks rose to record highs as hopes of a Middle East peace deal spurred risk-on buying and sent oil down around 8%, while the U.S. dollar slipped and the yen remained in focus amid intervention speculation.

Emirates Group reported record profit before tax of AED 24.4 billion for the year ended 31 March 2026. The group also recorded AED 150.5 billion in revenue, AED 59.6 billion in cash assets, declared an AED 3.5 billion dividend to its owner, and noted the UAE corporate tax rate rose to 15%.

LAUGFS Gas revised domestic refill prices to Rs. 6,245 (12.5kg) and Rs. 2,500 (5kg). Litro Gas held retail LP gas prices for May unchanged at Rs. 4,765 (12.5kg), Rs. 1,910 (5kg) and Rs. 890 (2.3kg).

Colombo bourse rebounded as the ASPI rose 0.69% (155.47 pts) to 22,739.77 after Middle East developments pushed oil below $100, with turnover over Rs. 4.1bn and net foreign inflow of Rs. 62.4m. JKH, MELS and RIL were among top positive contributors while LIOC fell and REEF gained.

Economist Ganeshan Wignaraja said Sri Lanka could position itself as an Indian Ocean hub for finance, trade, aviation and services if it maintains macroeconomic stability and implements reforms. He urged considering an 18th IMF programme as the current one ends mid-2027 and warned rising oil/gas/fertilizer prices and war-linked tourism and remittance disruptions pose risks.

Asian stocks jumped to record highs (MSCI Asia-Pacific ex-Japan +2.3%) as AI-driven buying and signs of progress toward a U.S.-Iran agreement boosted risk appetite; Brent crude fell about 1.2% to $108.51/bbl. Tech and semiconductors led gains while the dollar eased.

Gold rose 0.5% to $4,543.33 per oz after a prior five-week low, with US futures up 0.4%; gains were capped as a crude oil rebound pushed Treasury yields and the dollar higher, reviving inflation concerns and weighing on bullion.

Secondary government bond yields rose for a second consecutive session, with maturities trading from 8.32% (01.08.26) up to about 11.29% (15.09.34). A Rs.100bn T‑bill auction is scheduled, net liquidity surplus was Rs.246.30bn and USD/LKR closed near 319.90/320.40.

ASPI fell 0.49% (110.70 pts) to 22,584.30 as Middle East tensions dented sentiment; turnover was over Rs.2.1bn and foreigners were net sellers of Rs.42m. CINS, CTHR, HHL and SAMP were top negative contributors while COMB, LFIN, PKME, ACL, REEF, GRAN and JKH featured among active names.

Sri Lanka's construction PMI eased to 57.1 in March 2026 from 70.3 in February, remaining in expansion, the central bank said. Firms reported limited fuel and raw materials, rising costs and logistics delays tied to the Middle East conflict, while new orders, hiring and purchases rose.

The Iran war-driven energy crisis led the Asian Development Bank to cut growth for developing Asia to 4.7% this year and 4.8% in 2027 and raise its inflation forecast to 5.2% for this year. Governments are using subsidies, duty cuts, reserves and export curbs to shield consumers while several regional currencies have weakened.

Secondary bond yields rose marginally amid Middle East tensions and higher oil prices, with the 15.12.26 at 8.55%-8.65% and longer maturities trading around 10.05%-11.26%. Net money-market liquidity surplus was Rs.226.55bn (Rs.176.10bn at SDFR 7.25%), and USD/LKR closed at Rs.319.60/320.

Oil prices rose over 3% after Iran claimed it struck a U.S. warship, pushing Brent to $111.81/bbl and WTI to $105.34/bbl. The U.S. denied the strike; OPEC+ approved a modest output rise but flows through the Strait of Hormuz remain constrained.

Secondary bond market ended the week steady with yields broadly unchanged; the 91-day T-Bill yield fell to 8.20%, money-market liquidity rose to Rs.218.70bn, foreign holdings of rupee bonds held at Rs.144.20bn, and USD/LKR closed around 319.75/320.00.

Sri Lanka has seen four fuel price hikes in five weeks, the latest effective May 3 under a cost-reflective formula tied to higher global crude, driving a sharp rise in inflation and living costs. The CPI jump leaves the Central Bank weighing rate hikes against rupee depreciation risks.