News & market updates

Major central banks largely held interest rates in March as the Middle East conflict and volatile oil prices raised inflation risks and constrained room for policy easing. Developed markets saw 8 of 9 meetings unchanged (Australia hiked 25bp), while emerging markets were mixed, including several cuts and Colombia's 100bp hike.

Brent crude rose 5.4% to $106.66 a barrel after renewed US-Iran hostilities drove safe-haven demand and a stronger US dollar, which also pushed major currencies lower against the dollar.

President Anura Kumara Dissanayake told visiting IMF officials the government is taking measures to minimize the impact of the Middle East conflict while continuing the IMF-supported Extended Fund Facility. The IMF commended Sri Lanka's progress—growth, improved revenue management and stronger reserves—and the government said it has met programme targets.

An IMF delegation met President Anura Kumara Dissanayake to review Sri Lanka's Extended Fund Facility, noting the country has met programme targets with stronger reserves and improved revenue management. They flagged external risks from the Middle East conflict and discussed managing fuel price pressures and targeted relief.

EDB convened CPC and a broad cross-section of exporters to address fuel accessibility and distribution bottlenecks; CPC agreed to facilitate direct dialogue to establish a reliable, prioritized fuel supply mechanism for export-oriented industries including apparel, electronics and pharmaceuticals.

Central Bank of Sri Lanka expects interest rates to ease and says private sector credit rose 26.3% YoY to Rs.10.3 trillion by January with the OPR held at 7.75%. New private sector borrowing fell to Rs.82.6 billion in January, the lowest in 11 months.

The EDB convened a high-level meeting with the Ceylon Petroleum Corporation and export industry stakeholders to tackle fuel distribution problems affecting exporters; CPC agreed to engage directly with the private sector to improve prioritised and coordinated fuel supply.

The IEA, IMF and World Bank have formed a coordination group to align analysis and mobilize support for countries hit by the Middle East war's energy and economic shocks, prioritizing low-income energy importers and assessing energy prices, trade flows, inflation and financing needs. The group may provide targeted policy advice, concessional financing and risk-mitigation tools.

Gold fell about 1.3% to $4,694.48/oz after President Trump said the U.S. would continue the war in Iran, reversing a four-day rally; U.S. gold futures slid 1.9% to $4,723.70. Brent oil rose more than 4% and U.S. Treasury yields and the dollar advanced, weighing on bullion.

Oil jumped about 5% to $106.16/bbl and global stocks fell after President Trump said the U.S. would hit Iran "extremely hard" within weeks. The dollar strengthened and futures and Asian equities declined amid renewed worries over Strait of Hormuz supply disruptions.

Colombo Stock Exchange rose as the ASPI gained 0.55% (116.65 pts) to 21,182.83, with bank stocks leading turnover of Rs.370 million. WindForce filed to issue up to 40 million green bonds to raise Rs.4 billion; top movers included Sampath, ACL Cables and Dialog while HNB and John Keells weighed on the index.

CFA Society Sri Lanka and Frontier Research will host an evening discussion, “Resilience on the line: Evaluating Sri Lanka’s macro stability amid global shocks,” on 9 April 2026 (5–7 p.m.) at Courtyard by Marriott, Colombo City Centre. Speakers will cover risks including oil price shocks, shipping disruptions, weaker global growth and tighter financial conditions.

The Cabinet approved compensating fuel importers up to Rs.20/litre for 92 Octane petrol and up to Rs.100/litre for diesel, with Rs.20 billion allocated for the measure. It also froze fuel allowances for ministers, MPs and public officials at March 1, 2026 rates and said retail prices are expected to remain unchanged through April unless global prices rise sharply.

Headline inflation (CCPI) accelerated to 2.2% year-on-year in March 2026, up from 1.6% in February, the Central Bank said. Core inflation rose to 2.5% and the CBSL projects inflation will reach the 5% target in Q2-2026.

UAE stock markets in Dubai and Abu Dhabi lost about $120 billion in market value since the start of the US–Israel war on Iran, with the DFM down ~16% and ADX down ~9%. The conflict has also hit travel and tourism, causing widespread flight cancellations that weigh on the sector.

PUCSL approved an average electricity tariff increase of around 10% from 1 April; Opposition Leader Sajith Premadasa alleges the government is passing coal procurement losses onto electricity consumers. SJB MP Dr. Harsha de Silva warned the hike disproportionately affects middle-income households and flagged limited scope for continued fuel subsidies under IMF-linked reforms.

The Government ordered state institutions to switch off air conditioning by 3 p.m., require illuminated billboards to go dark by 8 p.m., and directed local authorities to limit street lighting to 6–10 p.m. as part of national energy-conservation measures; organisers of events over 100 people must use independent power and authorities also urged water conservation.

Brent crude rose over 3% to above $115/bbl as the US–Israel war with Iran entered its fifth week, while US-traded oil hit $101.62; the move coincided with sharp falls in Asian stocks (Nikkei -2.8%, KOSPI ~-3%).

SLPA says it has secured sufficient fuel to maintain uninterrupted operations across major ports despite monthly diesel demand rising from 1.5m to 2.5m litres; Colombo container volumes are up 10–15% while export growth has stagnated amid maritime uncertainties.

CAASL says Sri Lanka has about 34,000 tonnes of Jet A-1 at CPC plus 15,000t from the refinery and 43,000t on order, providing roughly a 57-day fuel buffer; a 35,000t shipment and an additional 8,000t are arriving. Flight disruptions have eased to about 30–35% from 50–60%.

Secondary bond yields edged higher across maturities (e.g., 01.05.28 at 9.65%, 01.03.30 ~9.99–10.00%, 01.10.32 at 10.70%) as selling pressure and external risks rose; Brent crude topped $115. A Rs.90 billion weekly T-Bill auction (40bn 91-day, 30bn 182-day, 20bn 364-day) is scheduled and USD/LKR closed near 315.10/316.00.

Sri Lanka’s Department of Agrarian Development has introduced a recommendation-based fuel distribution system that bypasses QR code requirements to ensure farmers get fuel for Maha season activities. Quotas are 15L/acre for harvesting and 10L/acre for land preparation, and CPC is developing a separate QR system for large farms.

The war in the Middle East is driving higher energy prices and major supply‑chain disruptions, which are boosting inflation and tightening global financial conditions. Energy importers, food and fertilizer‑dependent agriculture, tourism, manufacturing and banks face the greatest strain.

Brent fell about 1.08% to $111.56/bbl and WTI fell about 0.95% to $101.90 after reports President Trump told aides he was willing to end the campaign against Iran, trimming earlier risk-driven gains amid ongoing Strait of Hormuz and regional security concerns.

John Keells CG Auto, the sole authorised BYD and DENZA distributor, urged customers to use smart charging and provides 7kW and 2.5kW home chargers so vehicles can be scheduled to charge in off-peak hours, supporting grid stability amid higher tariffs and rising NEV demand.

Colombo Stock Exchange eased at midday with the ASPI down 0.33% to 21,022.14 and the S&P SL20 down 0.47% to 5,881.20. Brent futures fell below $110; Sampath Bank, Hayleys and ACL Cables were top decliners while Renuka Agri Foods rose after a filing showed a 10.04% shareholding.

The ASPI fell 1.33% (283.49 pts) to 21,092.24 as Colombo market opened lower amid rising oil prices and Mideast tensions; principal detractors included John Keells, NDB, Hayleys, Melstacorp and Commercial Bank while Lanka IOC and Browns Investments saw gains.

Escalating Middle East tensions pushed Brent crude above $100/bbl in March, prompting two domestic fuel price hikes and a drop in the LMD-PEPPERCUBE Business Confidence Index to 168. Tourism, remittances and domestic energy supply (gas) face downside risks that could keep confidence subdued.

Brent crude rose $2.43 to $115/bbl and is set for a record monthly gain (about 59%) after Houthi attacks widened the Middle East conflict, raising risks to shipping lanes around the Strait of Hormuz, the Red Sea and Bab el-Mandeb.

The Central Bank of Sri Lanka was a net buyer of FX, purchasing $700m in Jan–Feb 2026 and raising gross official reserves by $500m to $7.3bn. The rupee has depreciated ~1.3% YTD (~1.6% since the Middle East conflict) and CBSL says it will only intervene to manage short-term volatility under a flexible exchange rate and inflation-targeting framework.