News & market updates

Sampath Bank PLC signed an MoU with John Keells CG Auto to offer NEV buyers a 0.5% reduced interest rate on loans, insurance-financing and free credit cards for BYD and DENZA purchases. John Keells CG Auto is a subsidiary of John Keells Holdings PLC with nationwide sales and service coverage.

National Savings Bank Group reported a 1Q 2026 operating profit of Rs. 15.5 billion, with total operating income of Rs. 22.5 billion and customer deposits of Rs. 1.6 trillion. Asset quality and capital remained strong (Stage 3 ratio ~2.34%; Total Capital Ratio 24.9%).

PDMO and the ADB jointly hosted the Asian Regional Public Debt Management Forum 2026 in Colombo to address climate resilience and debt sustainability in the Asia-Pacific. Discussions centered on strengthening public debt management, debt sustainability analysis, local-currency markets, green financing and AI/digital tools for debt operations.

The Sri Lanka United Business Alliance (SLUBA) accused the government of policy failures and said unclear policy and the dollar crisis — including higher interest rates to strengthen the US dollar — are pushing businesses into distress and risking renewed national bankruptcy.

Free Lawyers alleged the Central Bank of Sri Lanka expanded M2b by Rs.1,653 billion in 2025 and a further Rs.610.7 billion in Jan–Mar 2026 via dollar purchases, linking this to recent rupee volatility. The CBSL countered that net FX operations injected about Rs.788.9 billion and that liquidity was partly absorbed by government repayments, withdrawals and coupon payments.

Sri Lanka sold 4,300 million rupees of 3-, 6- and 12-month Treasury bills on tap at average yields of 9.36%, 9.68% and 9.83%, bringing total bills sold this week to 99,859 million rupees; settlement is May 29.

IMF Executive Board completed the combined Fifth and Sixth reviews of Sri Lanka’s EFF, unlocking SDR508 million (≈US$695m) in immediate financing. Program performance was generally strong, but some continuous criteria were missed and risks from the Middle East war and Cyclone Ditwah weaken the outlook.

IMF approved a US$695m disbursement to Sri Lanka under its EFF despite breaches including intensified import controls and a cyberattack that led to a missed US$2.5m external payment; authorities requested a waiver and pledged corrective actions.

Colombo stocks recovered after the CBSL hiked policy rates by 100bps, with the ASPI up 0.11% at 22,199.23 and turnover around Rs.1.86bn. DIAL, CCS, BREW, CARS and NDB were top positive contributors; VLL saw net foreign buying while AAIC saw net foreign selling and Food & Beverage led turnover.

Senior public debt managers and international institutions met in Colombo at the 2026 Asian Regional Public Debt Management Forum to advance regional cooperation on climate resilience and debt sustainability, focusing on local-currency debt markets, green financing and AI/technology in debt operations.

Sri Lanka's rupee closed at 328.50/332.00 to the US dollar on Wednesday, weaker than Tuesday's 324.00/325.50, while government bond yields rose (01.08.2030: 12.00/15%, 15.01.2033: 12.45/55%, 15.03.2035: 13.00/15%).

Sri Lanka sold all offered Rs240 billion of 2030, 2033 and 2035 government bonds at average yields of 11.86%, 12.32% and 12.93% respectively; all three issues are available on tap.

Sri Lanka's Treasury bill yields jumped after the CBSL raised the overnight policy rate: 91-day 9.36% (from 8.18%), 182-day 9.68% (from 8.25%), 364-day 9.83% (from 8.49%); the PDMO accepted Rs.95,559 million of Rs.140,000 million offered, settlement May 29, 2026.

Bangladesh has requested a new IMF-supported programme and IMF staff are in discussions with authorities on their reform agenda and policy priorities to strengthen macroeconomic and financial stability.

Sri Lanka's rupee was quoted at Rs328.00/330.00 to the US dollar on Wednesday, weaker than Rs324.00/325.50 the previous day. The secondary bond market was quiet amid an ongoing auction of 240,000 million rupees in treasury bonds, with a hamstrung interbank market and importers buying forwards up to Rs380–400.

Asian shares rose and Brent crude traded near $100/bbl as markets awaited developments in US‑Iran talks and central bank commentary on inflation and interest rates. Investors also tracked currency moves, a likely RBNZ rate hold and gains in gold.

Central Bank Governor Nandalal Weerasinghe said importers had bought dollars forward at up to Rs380-400 amid a hamstrung interbank market, and the central bank raised rates by 100 basis points to slow credit and stabilise FX markets.

Central Bank Governor Nandalal Weerasinghe said the IMF-supported EFF program allows flexibility for policy adjustments, including targeted subsidies and revisions to key performance targets. He said the IMF Executive Board will approve the combined fifth and sixth reviews on Wednesday and that NIR targets and fuel pricing remain under periodic review.

Sri Lanka Customs set the USD exchange rate for import valuations at Rs.351.17 for 25–29 May, above prevailing interbank rates despite recent rupee recovery; observers urged the Central Bank to align the Customs rate with market rates, warning it could raise import costs and consumer prices.

Central Bank of Sri Lanka says FX market distortions were temporary and interbank liquidity has been restored after targeted steps; interbank rates rose from about Rs.320 to Rs.330 at the peak while some customer trades reached Rs.346–Rs.354. The CBSL said it used limited intervention, continues overnight liquidity absorption and can deploy further tools if volatility returns.

Central Bank hiked the OPR by 100bps to 8.75%; T-bill yields rose sharply (91-day 9.36%, 182-day 9.68%, 364-day 9.83%) and the weekly auction was undersubscribed, while the secondary bond market turned bearish; USD/LKR closed around 324.50/326.00.

Colombo market closed down 0.85% at 22,175.14 after the CBSL raised the policy rate by 100bps and amid heightened Middle East tensions. Foreign investors were net sellers of over Rs.3bn, turnover was Rs.4.93bn with AAIC crossings accounting for about Rs.3.1bn.

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%.

Treasury bill yields jumped at Tuesday's auction with 95.55 billion rupees sold of 140 billion offered; 3-month 9.36% (+118bp), 6-month 9.68% (+143bp), 12-month 9.83% (+134bp).

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 Central Bank of Sri Lanka said banks increased their willingness to lend in 1Q 2026, with loan demand rising across retail, corporate, SME and SOE sectors and overall NPLs declining; banks expect lending to rise further in 2Q while warning that geopolitical tensions and supply disruptions pose risks.

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.