News & market updates

The Central Bank of Sri Lanka urged the Government to continue fiscal consolidation and strengthen external buffers, warning rising global risks — geopolitical tensions, commodity price volatility and adverse weather — could threaten macro-financial stability. The warning was issued with the release of the Financial Sector Performance 2025 report.

CBSL said banking gross loans rose 21.4% y/y and finance company lending rose 51.9% at end-2025, with Stage 3 loan ratios falling to 9.7% (banks) and 6.1% (finance companies). Liquidity and capital buffers eased but remained above regulatory minima; ASPI gained 41.9% and the rupee depreciated 5.6%.

Secondary bond yields rose and market activity remained subdued ahead of a Rs.120 billion Treasury Bill auction (offered amount below maturing volume of ~Rs.142.44 billion). The rupee slightly appreciated to Rs.311.30/311.40 and short-tenor bills saw continued demand while longer-tenor yields moved higher.

Sri Lanka will allow private firms to import and sell fuel in US dollars for the export and tourism sectors to ease shortages; about 30 businesses have registered and can begin supplying fuel from tomorrow.

Central Bank said Sri Lanka must sustain fiscal consolidation and bolster external buffers to safeguard macrofinancial stability, noting private‑sector credit rose and public‑sector exposure fell in 2025. It warned the widened credit‑to‑GDP gap and external shocks (Middle East conflict, commodity volatility, Cyclone Ditwah) could weaken credit quality.

Sri Lanka's rupee strengthened to 311.30/40 per US dollar in spot trading (from 311.50/60), while government bond yields closed mixed on limited trading; the 15.12.2026 bond was about 8.10-8.20% and longer-dated maturities ranged roughly 9.15%-10.80%.

Central Bank reports credit expanded sharply in 2025: banking gross loans rose 21.4% y/y and finance companies' gross loans rose 51.9% y/y. Asset quality improved (stage‑3 loans down), liquidity and CAR moderated but stayed above regulatory minima; ASPI +41.9%, rupee −5.6%.

Secondary Treasury bond yields rose amid Middle East unrest and Brent crude staying above $100, while the rupee weakened to Rs.311.50/311.60. Selected maturities traded higher (e.g. 01.07.28 at 9.25%, 01.10.32 at 10.30%) with secondary volume Rs.7.93bn.

The Ceylon Chamber urged the government to temporarily limit non-essential foreign currency outflows and allow licensed bunkering firms to procure fuel independently, potentially in foreign currency, to protect exports and tourism amid the Middle East crisis. It also recommended prioritising IMF tranche continuity, dynamic fuel pricing, faster fuel and fertiliser procurement, and measures to support tourism and trade efficiency.

Sri Lanka's rupee was quoted at 311.40/60 to the US dollar and bond yields were broadly unchanged. Sovereign secondary market quotes ranged roughly from 8.10% to 10.90% across maturities and the telegraphic-transfer dollar rate was 308.00/315.00.

Sri Lanka rupee closed weaker at 311.50/60 per USD on Monday (from 311.15/25 on Friday) while government bond yields rose; reported yields ranged from about 8.10% (Dec 2026) up to roughly 10.80–10.90% (Jun 2035), with several maturities higher.

Ceylon Chamber urged the Government to adopt measures to safeguard economic stability, prioritising continuation of the IMF programme and timely tranches. It recommended fuel measures (dynamic pricing, QR system, faster procurement), securing fertilizer and aviation fuel, prioritising FX for critical imports, and bolstering tourism, exporters and port clearance.

Arutha Research warns the Middle East war risks Sri Lanka’s energy, food, exports and remittances — the UAE supplies about 38% of petroleum imports and CPC says fuel stocks cover roughly one month. Middle Eastern markets buy $852m (≈7%) of exports and Gulf countries provide about 38% of remittance inflows.

Sri Lanka's secondary government bond market was volatile early in the week but closed broadly steady week‑on‑week. A Treasury Bond auction raised Rs.87.02bn (66.94% of Rs.130bn offered) amid undersubscription, foreign holdings fell by Rs.4.5bn, and system liquidity remained ample at around Rs.406.78bn.

Sri Lanka's rupee was quoted at 311.10/30 to the US dollar, broadly unchanged, while government bond yields edged up slightly across maturities; the ASPI fell 1.51% to 21,365.78.

Foreign investors sold US$14.6mn of Sri Lanka rupee government bonds in the week ended March 12, reducing foreign holdings from a near 30‑month high amid renewed depreciation pressure on the rupee.

CA Sri Lanka held a forum warning that prolonged Middle East instability could spike oil prices and disrupt remittances, tourism and tea exports, raising inflation, exchange-rate volatility and risks to the banking/financial sector.

LOLC Securities' Investor Forum said a sovereign credit rating upgrade could attract foreign inflows as CSE market capitalisation rose to about Rs.7.6 trillion (from Rs.2.9 trillion in 2022). The forum highlighted stabilised macro fundamentals, recovering exports and tourism, and sectoral opportunities in finance, construction and export-oriented industries.

Sri Lanka's rupee weakened to 311.15/25 per US dollar on Friday while government bond yields were broadly steady, with maturities from 15.03.2028 to 15.06.2035 trading roughly in a 9.05%–10.85% range.

Sri Lanka's rupee weakened to 311.00/10 per US dollar while bond yields were broadly steady (selected maturities quoted roughly 9.55%–10.75%); the ASPI fell 0.66% to 21,843.94.

Advocata Institute praised the Government's mid‑month fuel price revision as preventing hoarding and shortages and urged cost‑reflective pricing and greater transparency in the Ceylon Petroleum Corporation's pricing formula, noting fuel accounts for 15% of Sri Lanka's current‑account outflows. It recommended weekly (moving toward daily) adjustments to protect scarce foreign exchange, improve fiscal discipline and encourage a shift to greener substitutes.

Treasury bond auctions raised Rs.87.02bn (66.94% of Rs.130bn offered) with weighted average yields at or below secondary market levels (yields 9.63%–10.80%); the 2036 tenor was fully subscribed and has an issuance window until 13 Mar 2026. Money-market surplus was Rs.319.48bn and USD/LKR closed near 311.00/311.15.

Sri Lanka's rupee closed weaker at 311.00/05 per US dollar (from 310.85/95) and government bond yields were broadly steady, with the 15.12.2026 note at 8.20/30% and other maturities largely unchanged.

The Economic Monitoring Committee has started assessing the economic fallout from the Middle East crisis, flagging risks to foreign-exchange flows, higher energy costs and impacts on remittances, trade and tourism that could affect market stability.

Weekly T-Bill auction raised Rs.96.72 billion (74.4% of Rs.130 billion) as the sale was undersubscribed; weighted average yields dipped slightly — 91-day 7.61% (-2bp), 182-day 7.91% (-1bp), 364-day 8.23% (unchanged). The Central Bank drained liquidity via overnight repo Rs.150bn and seven-day repo Rs.90bn, with USD/LKR closing at 310.85/310.95.

Sri Lanka's rupee closed at 310.85/95 to the US dollar, slightly stronger than 310.95/311.05 previously; government bond yields edged up, e.g. the 15.09.2027 bond at 8.50/60% and the 01.10.2032 bond at 10.20/30%.

The Economic Surveillance Committee met at the Presidential Secretariat to discuss urgent measures to stabilise Sri Lanka's economy amid the Middle East conflict, focusing on risks from fuel imports, remittances, trade, tourism and export links.

Sri Lanka's rupee was quoted at 310.95/311.10 to the US dollar and bond yields were broadly steady, with a 130,000 million rupee Treasury bill auction ongoing; key government bond yields showed little change. The ASPI rose 0.54% to 22,499.79 and the S&P SL20 climbed 0.84% to 6,333.27.

The Government has formed an Economic Surveillance Committee chaired by Labour Minister Dr. Anil Jayantha Fernando to monitor and recommend responses to the economic fallout from the Middle East conflict, which risks higher fuel costs, reduced remittances (about 1 million migrant workers) and FX pressures. UNCTAD warns Strait of Hormuz disruptions have pushed Brent above $90 and could raise freight and fertiliser costs, amplifying spillovers to trade and vulnerable economies.

Falling global oil prices and stronger external metrics prompted a relief rally in Sri Lanka’s secondary government bond market, driving yields lower across the curve (e.g., 01.08.26 at 8.30%, 15.02.28 at 9.10%). Ahead of a Rs.130bn T‑bill auction, money‑market liquidity stayed ample (net surplus Rs.335.36bn) and USD/LKR closed around Rs.310.90/311.00.