News & market updates

Telegraphic transfer rate quoted at 334.50/343.50 LKR per USD and local government bond yields were higher across the curve, e.g. 15.06.2029 at ~9.05/9.20% and the long end around 11.30–11.60%.

Foreign investors sold a net US$14.77mn (4,725m rupees) of Sri Lanka government securities in the week to May 14, making rupee bonds a net outflow for the year amid renewed rupee depreciation fears. The rupee is down over 5% YTD and a 35% fuel price hike has pushed inflation higher, pressuring central bank policy.

Sri Lanka's rupee weakened intra-day (trades 327.85–328.90) and the telegraphic transfer rate was 330.50/339.50; government bond yields rose across maturities (e.g., 15.03.2028 closed at 9.75/85% up from 9.65/75%).

Asian shares were mixed and global bonds recovered after U.S. President Donald Trump paused a planned attack on Iran, sending Brent crude down over 2% to $109.41/bbl and 10-year U.S. Treasury yields easing to about 4.60%. Nvidia earnings due Wednesday will test AI-driven market sentiment.

Sri Lanka's rupee weakened to TT 328.50/337.50 to the dollar and government bond yields rose, with the 15.12.2029 quoted at 10.05/15% (up from 10.00/10%) and longer-dated bonds around 11.20–11.50%; the ASPI was up 0.90% at 22,513.

Secondary bond yields rose this week amid Middle East tensions and higher Brent crude, with the 15.12.27 at 9.20%, 15.10.29 at 10.00% and the 01.06.33 at 11.05%. Money-market liquidity showed a Rs.183.53bn surplus (Rs.151.18bn at SDFR 7.25%), the CB drained Rs.75bn via overnight repo at 7.73%, and USD/LKR traded 326.50–327.50 ($86.5m volume).

Global stocks slipped as drone attacks in the Gulf pushed Brent to about $110.55/bbl and U.S. crude to $102.48, lifting bond yields and stoking inflation concerns. S&P 500 and Nasdaq futures fell ~0.5%, European markets were mostly lower and Asian shares were mixed after weak Chinese data.

Bank of Ceylon reported Profit Before Tax of Rs. 28.8 billion and Profit After Tax of Rs. 18.8 billion for the quarter ended 31 March 2026. Total assets stood at Rs. 5.5 trillion, deposits Rs. 4.5 trillion and gross loans Rs. 2.7 trillion; Tier I CAR 13.04% and total CAR 17.31%.

Sri Lanka's rupee had no spot closing quote after trading between 326.50–327.50 to the dollar and the TT rate was 327.5000/334.5000, while government bond yields rose across maturities (e.g. 15.12.2027 closed at 9.10/30% vs 9.00%).

The government passed the Microfinance and Credit Regulatory Authority Act No.9 of 2026 in March; critics warn its onerous registration and compliance rules could dismantle women-led community Self‑Help Group savings and credit programmes. Advocates seek fixes including stakeholder consultation, a light-touch registration pathway for non-commercial SHGs, clear definitions, consumer protection and Central Bank-determined interest caps.

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.

No spot quote for the Sri Lanka rupee early Monday and bond yields edged up slightly. The ASPI fell 1.59% to 22,542 while the S&P SL20 rose 1.24% to 6,206; USD TT rates were 326.50/333.50.

Capital Alliance PLC (CALT.N0000) borrowed Rs. 3.6 billion of related-party commercial paper (Rs.2.1bn from CAL Fixed Income Opportunities Fund, Rs.1.5bn from CAL Five Year Closed End Fund) at 10% p.a., maturing 12 June 2026, to boost liquidity.

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 IMF Executive Board will decide on May 27, 2026 on the Fifth and Sixth reviews of Sri Lanka’s EFF; approval would give Sri Lanka access to about US$700 million in financing.

State-owned Bank of Ceylon reported PAT of Rs. 18.8bn and PBT of Rs. 28.8bn for 1Q ended 31 March 2026. Key metrics: NII Rs.52.9bn, total operating income Rs.61.5bn, impairment charge Rs.7.9bn, total assets Rs.5.5tn, deposits Rs.4.5tn, Tier-1 CAR 13.04%.

Central Bank Governor Nandalal Weerasinghe warned lowering Sri Lanka's inflation target to 2% would require strict monetary tightening and higher interest rates that would compromise economic growth. The bank currently targets 5% under a flexible exchange rate and the three-year agreement with the Finance Ministry ends in August.

No spot quote was available for the Sri Lankan rupee on Friday after intraday trades between 325.10 and 326.00 to the dollar; the telegraphic transfer rate was 325.00/332.00. Government bond yields were broadly steady, with maturities from 2028–2034 around 9.70–11.20%.

Pan Asia Banking Corporation (PABC.N0000) reported Q1 2026 Profit Before Tax of Rs.1.65 billion, up 13% YoY, with loans +10% to Rs.239.49 billion and deposits +10% to Rs.254.19 billion. Asset quality improved (Stage 3 ratio 1.57%) and CASA rose to 22.63% while the bank invested in digital and branch expansion.

First Capital Research warns Sri Lanka risks a Jamaica-style debt-interest spiral: despite initial success with Domestic Debt Optimization, sluggish growth and a shift to a Treasury Single Account could dry up private-sector bank credit and delay re-entry to international bond markets.

Commercial Bank Group’s assets reached Rs. 3.61 trillion as at 31 March 2026, surpassing Rs. 3.5t, with loans up Rs. 71.61b and deposits up Rs. 171.14b. The Group posted Q1 net profit of Rs. 17.94b (up 19.8%), with provision cover >75% and Tier-1 ratio 13.32%.

Sri Lanka's rupee was quoted at 325.25/326.25 to the US dollar on Friday, while government bond yields were broadly steady with the 15.09.2029 tenor quoted at 9.95/10.00%. The All Share Price Index was up 0.26% (60.26 points) at 22,959 and the S&P SL20 rose 0.31% to 6,286.

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.

Pan Asia Banking Corporation reported Q1 2026 PBT up 13% to Rs. 1.65 billion (PAT Rs. 1.05 billion), with advances up 10% to Rs. 239.49 bn and deposits up 10% to Rs. 254.19 bn; credit loss expenses fell 93% and NIM was sustained.

Secondary bond yields edged up, with the 01.10.32 maturity trading at 10.75% and other maturities between 8.40%–10.10%; the Treasury raised Rs.13bn (the full amount offered) from a Rs.73.08bn subscription via the Direct Issuance Window. Net liquidity surplus was Rs.253.75bn and USD/LKR traded at 324.25–325.00.

Sri Lanka sold Rs13,000 million of Treasury bonds on tap at weighted average yields of 10.16% (01 Aug 2030) and 10.24% (15 Jun 2034), bringing total bonds sold this week to Rs189.62 billion.

Dealers gave no spot quote for the Sri Lankan rupee on Thursday (one-week 326.00/327.00 previously), while bond yields edged up — TT dollar 323.50/330.50 and government bonds rising to roughly 9.65%–11.20%.

Commercial Bank Group reported total assets of Rs. 3.61 trillion as at 31 March 2026, up Rs. 230 billion (6.81%) in Q1. The group posted net profit of Rs. 17.94 billion for the quarter (up 19.8% YoY), with provision cover over 75% and a CASA ratio of 40.18%.

Sri Lanka's Treasury bill yields fell across maturities at Wednesday's auction and all 80 billion rupees of offered bills were sold, bringing total issuance to 88 billion rupees; 3M yield 8.13% (-7bp), 6M 8.243% (-1bp), 12M 8.49% (-3bp).