News & market updates

The Ceylon Electricity Board has requested an 11% tariff increase from the regulator, citing a depreciated rupee (using 308.65/USD vs 303.33 previously) and higher local diesel and fuel costs despite falling global crude and coal prices.

Sri Lanka was ranked the most affordable retirement haven in Asia by the Annual Global Retirement Index, with retirees reporting comfortable living for about $2,200/month and some managing on as little as $1,000/month thanks to low housing, food, transport and healthcare costs.

Private credit from commercial banks rose to a new monthly high of Rs262 billion in November 2025, taking total private credit to Rs10,029 billion and 12-month growth to 26%. Net bank credit to government fell and the rupee weakened to 308/USD, prompting concerns about the central bank's operating framework.

The central bank bought US$250.8m in December 2025 and sold US$28.3m, contributing to roughly a three‑unit depreciation of the rupee to about 309.5–310. Analysts say these central-bank dollar purchases monetize reserves, conflict with domestic rate anchors, and risk higher energy/food prices and strain on state utilities.

Oil prices rose in early Asian trade, with WTI around $58.27/bbl (up 0.85%), after gains driven by rising geopolitical risks including U.S. seizures of Venezuela-linked tankers and unrest in Iran.

Central bank lending to banks rose to Rs48 billion on Jan 08 as state banks faced a severe cash crunch, raising liquidity concerns. Analysts warned the government's 'domestic buffer' withdrawals could strain interbank markets, prompt central bank accommodation and pressure interest rates, inflation and the rupee.

Sri Lanka's rupee weakened to 310.10/20 per US dollar while bond yields opened broadly steady and a 100,000 million rupee T-bill auction was ongoing. Analysts warned central bank dollar purchases could push the rupee down and, if sterilized via deflationary policy, raise energy and food costs.

The US and Venezuela agreed to export up to $2 billion of Venezuelan crude (about 30–50 million barrels) to the United States, likely reallocating cargoes from China and increasing heavy oil flows to the US Gulf; Chevron currently handles existing exports.

Sri Lanka plans to cut power generation costs to 25 rupees a unit (from about 37 rupees) by mid-2025 through competitive bidding, targeting roughly a 32% reduction. However, severe rupee depreciation is prompting renewable investors to demand US dollar tariffs, which could undermine the plan.

Global equities extended gains with US indexes hitting records on AI-led tech rallies while oil prices slipped; investors are watching upcoming US data that could influence Federal Reserve interest-rate decisions.

Government bond yields in Sri Lanka fell overall through 2025 on fiscal consolidation, deflation and renewed demand, but episodic shocks—US reciprocal tariffs, the Iran–Israel conflict—and Cyclone Ditwah (Rs.500bn supplementary estimate) caused intermittent yield spikes and increased uncertainty for 2026.

Sri Lanka's rupee closed at 310.00/10 to the US dollar, down from 309.75/85, while short-end bond yields edged up and the rest of the curve remained steady. Analysts warned that central bank dollar purchases at this level could push the rupee lower and raise energy and food costs unless sterilized.

Sri Lanka's Cabinet awarded a Murban crude procurement for four shipments (2,800,000 +5% barrels) for 15.04.2026–14.08.2026 to Singapore-based Vitol Asia, chosen from five bids on the recommendation of a procurement committee.

Asian stocks extended a record rally as MSCI's Asia-Pacific index climbed about 0.4% to a new high, led by Japanese gains; crude eased modestly while gold and copper hovered near record levels and the dollar was steady ahead of the U.S. jobs report and Fed rate expectations.

Gold rose about 2.4% to $4,433/oz after the US capture of Venezuelan President Nicolás Maduro as investors moved into safe-haven assets; silver gained ~4.9%. Oil was little changed while energy shares rose on expectations of greater access to Venezuela’s oil reserves.

Ceylon Petroleum Corporation raised fuel prices effective last night: Auto Diesel +Rs2 to Rs279/L, Super Diesel +Rs5 to Rs323/L, Petrol Octane 95 +Rs5 to Rs340/L and Kerosene +Rs2 to Rs182/L; Petrol Octane 92 unchanged.

Ceylon Petroleum raised most fuel prices effective midnight Jan 05, 2026: Octane 95 to LKR 340/l (from 335), Auto Diesel to LKR 279/l (from 277), Super Diesel to LKR 323/l (from 318), Kerosene to LKR 182/l (from 180); Octane 92 remains at LKR 292/l.

Colombo stocks rose as the ASPI gained 1.21% to 23,292.91 and the S&P SL20 hit a six-week high of 6,379.11, led by gains in HNB, Commercial Bank, John Keells, NDB, Sampath Bank and Lanka IOC.

Asian stocks climbed as investors weighed U.S. intervention in Venezuela, with MSCI's Asia-Pacific ex-Japan index up 1.2% and Brent crude around $60.87. The U.S. dollar and 10-year yield rose slightly while gold gained about 1%.

President Trump said the US will 'run' Venezuela and rebuild its oil infrastructure after Venezuelan leader Nicolás Maduro was captured; Venezuela faces hyperinflation (estimated ~549%) and oil production has fallen to around a third of past levels, worsening energy-market disruption.

Sri Lankan authorities pledged to enforce the law against tuk-tuk gangs using violence to intimidate PickMe and Uber drivers, warning the tactics threaten the island's tourism safety brand.

Sri Lanka’s 2025 combined IMF-backed stabilization and reform gains with a late-November setback from Cyclone Ditwah. Key items include a Central Bank rate cut (lending window to 8.25%), DFCC’s sale of a 50% Acuity stake to HNB for LKR 6.5bn, and John Keells launching the $1.2bn City of Dreams resort alongside major energy project deals and rooftop-solar grid issues.

Central government debt rose by 936 billion rupees to September 2025—more than double the 441 billion-rupee budget deficit—with foreign debt up 545 billion rupees to 18,974 billion amid 2025 rupee depreciation. Analysts pointed to central bank policy, a May rate cut and Treasury dollar operations as contributing factors.

IMF cut Sri Lanka's projected Net International Reserves for end‑2025 to about US$2,159m (a US$666m rise from 2024) from a prior projection of US$2,729m; the end‑December IMF program target is US$448m. The downgrade reflects risks from rate cuts, strong private credit, rupee pressure and cyclone-related outflows.

Gold and silver prices surged after the US Federal Reserve cut rates and halted quantity tightening: gold around $4,475/oz, silver about $72/oz, and copper up roughly 10% to $5.58/lb.

Sahamitr Metal Pressure Containers was awarded a Cabinet-approved procurement contract to supply Litro Gas Lanka with 120,000 2.3 kg, 185,000 5 kg, 450,000 12.5 kg and 7,000 37.5 kg LPG cylinders for 2025–2027 following an international competitive bidding process.

IMF warns Cyclone Ditwah could destroy 2.5–5% of GDP, widen the balance-of-payments gap by about $700m and push average inflation to 5.4% in 2026, above the CBSL 5% limit. Agriculture and tourism are hardest hit while reconstruction may support construction but raises external and debt risks.

Treasury told parliament excess domestic borrowings of about Rs1.2 trillion cost roughly 2% to maintain as a cash buffer. The excess is held in state banks (c. Rs1tn by year-end), raising interbank liquidity risks and crowding out private credit; Rs500bn earmarked for hurricane relief.

Sri Lanka's Cabinet approved awarding Litro Gas Lanka's cylinder procurement contract for 2025-2027 to Thailand's Sahamitr Metal Pressure Containers (SMPC) for 120,000 (2.3kg), 185,000 (5kg), 450,000 (12.5kg) and 7,000 (37.5kg) cylinders. SMPC was the lowest bidder of six.

Sri Lanka's central bank bought $90mn in November 2025 (net $74.3mn), contributing to the rupee's fall to about 307.8/USD. The bank has bought $1,625mn in 2025 while returning only $89.3mn YTD, creating liquidity that may pressure the exchange rate unless sterilized.