News & market updates

ADB President Masato Kanda met CBSL Governor Nandalal Weerasinghe on 23 June to discuss current economic developments, ongoing reform efforts and central bank policies. The meeting included senior Sri Lankan officials and ADB representatives during Kanda's three-day visit.

Sampath Bank’s subsidiary Siyapatha Finance PLC saw its subordinated debenture issue (tranches Rs. 2,000m, Rs. 1,000m and Rs. 750m) oversubscribed with applications exceeding Rs. 3.75 billion. The five-year debentures (Rs.100 per unit) carry a fixed 11.50% interest and proceeds will strengthen Tier-2 capital.

Sri Lanka's rupee recovered to 313.00/50 against the US dollar and bond yields opened lower as oil prices fell, with the Central Bank keeping the Overnight Policy Rate unchanged at 7.75%. The ASPI was down 2.90% and an 80,000 million rupee T-bill auction was ongoing.

Stocks rose and Brent crude fell about 6% to $98.30/bbl after reports the U.S. sought a month-long ceasefire with Iran; S&P 500 futures were up 0.9% and European futures 1.2%. Bond yields eased a few basis points even as markets still price further central-bank rate hikes.

The Central Bank of Sri Lanka kept the Overnight Policy Rate at 7.75% and said low inflation (1.6% y/y in Feb) provides space to absorb higher energy costs, forecasting inflation will reach 5% in Q2-2026. It noted USD 7.3bn reserves, some rupee depreciation pressure and risks to tourism, trade and remittances.

Monetary Policy Board kept the Overnight Policy Rate unchanged at 7.75%. Inflation was 1.6% y-o-y in Feb 2026 and is expected to reach 5% in Q2-2026; the board cited higher global energy prices, Middle East conflict risks, and FX reserves of USD 7.3bn as key considerations.

ADB announced a financial support package including fast-disbursing budget support and reactivated trade and supply-chain finance (including for oil imports) to help developing member countries manage economic fallout from the Middle East conflict. The bank will use countercyclical resources and monitor energy, inflation and financial conditions.

The Cabinet approved expansion of a concessional loan scheme offering youth loans at a 4% annual rate via state banks, allocating Rs. 500 million in the 2025 Budget and an additional Rs. 750 million in the 2026 Budget to support young entrepreneurs in agriculture and industry.

Secondary government bond yields swung amid Middle East tensions and ahead of the Central Bank's 2nd Monetary Policy Review due today, with the 15.02.28 maturity at 9.50% and longer maturities trading up to 10.90%. The weekly T-bill auction offers Rs.80bn (below ~Rs.87.17bn maturing) and USD/LKR closed around 314.00/314.40.

ADB announced a financial support package to help its developing member countries mitigate economic and financial impacts from the Middle East conflict, including fast-disbursing budget support and reactivated trade and supply-chain finance for oil imports. The bank will mobilize countercyclical lending and TSCFP support to address energy price volatility, supply disruptions, inflationary pressures and risks to tourism and trade.

Sri Lanka's rupee weakened to 314.20/40 per USD from about 313.00/314.00, and government bond yields edged up across maturities (e.g., the 15.10.2028 bond closed at 9.60/80% vs 9.45/65%).

Fitch warns APAC sovereign credit profiles face heightened downside from a prolonged Iran conflict as higher oil prices and supply disruptions raise inflation, weaken growth and worsen public finances; an adverse scenario assumes Brent at about $128/bbl in 2Q26 and $100/bbl for 2026. Net fossil-fuel importers (e.g. India, Korea, Pakistan, the Philippines, Maldives, Thailand) would be hardest hit, while supply-chain and fertiliser disruptions could amplify inflation and food-security risks.

Sri Lanka's rupee weakened to 313.50/314.50 per USD while government bond yields edged higher (e.g. 2029 bond ~9.80–9.85%) and the All Share Price Index fell 3.61% to 21,100.98, with the S&P SL20 down 3.84%.

Global markets retreated as Brent rose ~4.2% to $104.21/bbl and U.S. crude to $91.93, while U.S. Treasury yields climbed, reversing a brief relief rally amid ongoing Middle East tensions. The dollar strengthened and spot gold fell about 1%.

Secondary Treasury bond yields initially rose on external pressures but reversed and closed lower after Brent crude plunged >10% amid US de-escalation; selected maturities traded in ranges ~8.57%-11.23% and secondary turnover was Rs.23.63bn. Money markets showed a net liquidity surplus of Rs.240.27bn and the USD/LKR spot closed around Rs.313.00/314.00.

Sri Lanka's rupee weakened to 313.00/314.00 per USD from 311.80/312.00, while government bond yields recovered and oil prices fell below $100 after the US announced a pause in planned strikes on Iran.

Sri Lanka's NCPI inflation fell to 1.6% year‑on‑year in February 2026, down from 2.4% in January 2026. Food inflation eased to 1.1% (from 3.4%) while non-food inflation rose to 1.9% (from 1.6%).

Sri Lanka's rupee weakened to 312.50/313.50 per USD on Monday from 311.80/312.00 on Friday, while government bond yields opened largely steady (e.g. 15.06.2029 at 9.70/80%, 15.12.2029 at 9.85/95%). The ASPI fell 2.01% to 20,225.08.

Economist Talal Rafi warned the Middle East war could complicate Sri Lanka's debt path as IMF program plans boost external reserves from ~$8.9bn to $13.4bn by end-2027 and envisage a $1.5bn ISB in 2027, with annual external debt servicing rising from $2bn to $3bn; he noted reform-dependent opportunities in renewables and data centres.

Asia shares fell while US 10-year Treasury yields hit an eight-month high of 4.415% as the Gulf war escalated and Brent oil traded around $112.62 a barrel, lifting inflation and pushing markets to price out rate cuts.

CT Smith Securities warned a prolonged Middle East conflict could weigh on Sri Lanka's banking-sector earnings by reducing non-interest income such as remittances, trade finance and LCs. The note adds higher inflation may limit CBSL rate cuts ahead of Wednesday's Monetary Policy Review.

Secondary government bond yields rose sharply across the curve last week (selected tenors up 20–30bps; long-end approaching ~11%) as geopolitical risk, higher global rates and oil gains drove selling. T-bill auction rates held, foreign holdings fell by Rs 1.38bn, and USD/LKR closed ~Rs.311.85/312.00.

Siyapatha Finance PLC's debenture issue was oversubscribed, with subscriptions exceeding the Rs.3.75 billion full issue and the offer closed on 20 March; the company will notify the Colombo Stock Exchange of the basis of allotment.

Sri Lanka sold 3,369 million rupees of treasury bills on tap at average rates of 7.61%, 7.91% and 8.23%, bringing total bills sold last week to 64,162 million rupees. The debt office sold 3-month bills at 7.61%, 6-month at 7.91% and 12-month at 8.23%.

A 25-member delegation from the Central Bank of Sri Lanka attended a week-long Capacity-Building Program on “Financial Frontiers – Innovation, Resilience and Internationalisation” at the Reserve Bank Staff College, Chennai from 2–6 March 2026. The program covered financial innovation, reserve management, currency internationalisation, payments and fintech regulation to strengthen central bank competencies and India–Sri Lanka financial cooperation.

Sri Lanka's rupee weakened to 311.80/312.00 per US dollar on Friday from 311.50/65 the previous day. Most government bond yields fell, for example the 15.02.2028 bond closed around 9.20–9.35% and the 01.06.2033 around 10.60–10.85%.

Sri Lanka’s rupee was quoted at 311.50/80 to the US dollar, slightly weaker; government bond yields largely stabilized with mixed moves across maturities. The All Share Price Index rose 0.82% to 20,429.62.

Secondary Treasury bond yields rose sharply by about 20–30 bps across the curve, with several maturities trading up to c.11.12% and total secondary Treasury turnover of Rs.51.91bn on 18 March. Money-market net liquidity surplus was Rs.283bn (CB drained Rs.100bn; SDFR deposits Rs.183.12bn) and USD/LKR spot closed near 311.50/311.65.

An IMF team will visit Colombo from March 26 to April 9, 2026 to conduct combined fifth and sixth reviews of Sri Lanka’s EFF, and completion could unlock about US$700 million in tranches. The reviews follow delays due to Cyclone Ditwah and will cover fiscal response, monetary policy and financial-sector stability.

An IMF staff team will visit Sri Lanka from March 26 to April 9, 2026 to conduct the combined 5th and 6th reviews of the EFF-supported reform programme and will report findings at the mission's conclusion.