News & market updates

The Monetary Policy Board kept the Overnight Policy Rate unchanged at 7.75%. The Board said the current stance is intended to support steering inflation toward the 5% target amid evolving domestic and global uncertainties.

The Finance, Planning and Economic Development Ministry issued a circular expanding relief for Cyclone Ditwah‑hit micro and small businesses, providing one‑time grants (Rs.200,000 for registered small businesses; Rs.50,000 for unregistered home units; Rs.25,000 for mobile hawkers; building grants up to Rs.5 million) and concessional loans of Rs.250,000–25 million at 3%–5% with grace periods for recovery and reconstruction.

Government allocated nearly Rs.131 billion for MSME credit schemes, including Rs.95.7bn for interest-subsidy loans in 2026, Rs.10bn interest-free funds for banks to on-lend at 3%, and Rs.25bn for revival loans up to Rs.25m at 5%; three state banks have already begun issuing working-capital loans and 13 private banks have expressed willingness to join.

Central Bank's Monetary Policy Review is due today at 07:30 and is widely expected to hold the Overnight Policy Rate at 7.75%. A Rs.125bn weekly Treasury Bill auction (91/182/364-day) is scheduled below maturities (~Rs.132.82bn); secondary bond trades were light and USD/LKR closed near 309.7.

The Treasury announced a Rs.205 billion bond auction for 29 Jan across three maturities (Rs.60bn 1-Mar-2030 at 9.50% coupon; Rs.80bn 1-Jun-2034 and Rs.65bn 1-Jul-2037 at 10.75%). Secondary yields edged up marginally, the rupee strengthened to ~Rs.309.55, and net liquidity surplus was Rs.169.74bn.

Gold surged to a record above $5,000 an ounce, with spot gold at $5,071.96 (touching $5,085.50) after a 1.79% rise, as investors sought safe havens amid geopolitical uncertainty, dollar weakness and expectations of US monetary easing.

LOLC Finance (LOFC.N0000) launched the LOLC Super Savings Account, a tiered-interest savings product with a minimum opening deposit of Rs. 15,000 that offers progressively higher returns as balances grow. The product targets customers with informal or seasonal incomes and aims to combine flexibility with higher yields for short-term reinvestment and savings goals.

Community savings and credit groups held a conference opposing the proposed Microfinance and Credit Regulatory Authority Bill, arguing it would subsume community credit under commercial microfinance and expose women to predatory interest and heavier regulation. Organisers urged the government to consult grassroots groups and protect community-based credit systems.

Sri Lanka's central bank is expected to keep its policy rate at 7.75% ahead of an IMF review of the sixth tranche of a $2.9bn programme. The IMF approved $206m in emergency funding for cyclone recovery after the World Bank estimated $4.1bn in damage and the government approved 500bn LKR in extra spending.

First Capital Holdings (CFVF.N0000) hosted its 12th Investor Symposium and presented a 2026 outlook forecasting Sri Lanka GDP to soften to 3.0–4.0% (from 5.0% in 2025). The presentation flagged Cyclone Ditwah-driven spending weakness, higher post-storm capital expenditure needs and renewed debt-management risks, alongside discussion on rates, FX and bond markets.

Secondary bond market rallied with a parallel downward shift in the yield curve as system liquidity exceeded Rs. 200 billion. Weekly T‑bill weighted average yields fell (91d 7.93%, 182d 8.36%, 364d 8.47%), total accepted T‑bill Rs.137.5bn, foreign GS holdings down Rs.550m; USD/LKR ~309.76/309.80.

Gold surged to a record above $5,000 an ounce, with spot at $5,071.96 (+1.79%) as investors piled into the safe-haven amid geopolitical uncertainty. Prices are up 64% in 2025, supported by central bank buying and expectations of U.S. monetary easing.

Binance Research reports total crypto market capitalization surpassed $4 trillion in 2025. Bitcoin reached a new all-time high but the crypto market ended 2025 down about 7.9% amid significant macro-driven volatility.

Gold hit a record high of $4,904.66/oz on Jan 22 and Goldman Sachs raised its year-end target to $5,400/oz, citing geopolitical tensions, a weaker dollar, expectations of Fed rate cuts, and strong central bank and investor demand.

Secondary Treasury bond yields fell on 21 Jan 2026 with robust activity and Rs.81.83 billion transacted in the secondary market (e.g. 01.05.28 ~9.11%-9.12%; 15.06.35 ~11.03%-11.06%). Net liquidity surplus decreased to Rs.157.54 billion with Rs.157.57 billion at the CB SDFR (7.25%), and USD/LKR closed at 309.75/309.85.

The Cabinet approved tabling in Parliament a Central Bank report explaining why headline inflation deviated from the 5% target after quarterly CCPI averages of -1.1% (Q2 2025) and 0.8% (Q3 2025) missed the target for two consecutive quarters, per Section 26 of the CBSL Act.

Sri Lanka sold Rs25,018 million of treasury bills on tap at average rates of 7.93% (3m), 8.36% (6m) and 8.47% (12m), bringing this week's total bill sales to Rs137.5 billion; settlement is Jan 23.

Sri Lanka rupee closed at 309.75/85 to the US dollar, slightly weaker than the prior day; government bond yields were mixed-to-lower — the 15.12.2026 bond fell to 8.35/45% (from 8.40/50%), the 15.03.2028 bond rose to 9.08/12%, and longer-dated yields ranged around 9.60–11.00%.

Government has consolidated MSME financial facilities into a single digital Rs.95 billion framework and the NCGI will issue Rs.7,000 million in credit guarantees in 2026 to unlock about Rs.10,000 million in MSME lending. Sixteen banks, including HDFC, Commercial Bank, NDB, HNB, Sampath, Seylan, DFCC, Nations Trust and Cargills Bank, will participate in channeling concessional and disaster-relief loans.

Rupee quoted at 309.70/85 to the US dollar, slightly weaker than the prior day, while Sri Lankan government bond yields eased on shorter tenors (e.g., 15.12.2029 at 9.60/65% and 15.03.2031 at 9.90/10.00%).

Weekly Treasury Bill auction saw weighted average yields decline — 91-day 7.93% (-2bp), 182-day 8.36% (-8bp), 364-day 8.47% (-1bp); the PDMA raised Rs.112.48bn (89.99% of Rs.125bn) with bids 2.81x. Secondary bond yields consolidated, net liquidity was Rs.189.06bn and USD/LKR closed near 309.75.

LOLC Finance (LOFC) launched Exclusive Short-Term Fixed Deposits with 4- and 7-month maturities at competitive rates and reported FY2024/25 PAT of Rs.25.1bn and H1 FY2025/26 PAT of Rs.14bn (72% YoY). The company holds a gross lending portfolio of Rs.360.2bn, customer deposits of Rs.238.6bn and an A+ (Stable) rating.

Sri Lanka's rupee closed at 309.72/80 to the US dollar, slightly weaker than 309.65/70 the previous day, while government bond yields were broadly steady (e.g., 15.12.2026 ~8.40–8.50%, 15.03.2028 ~9.03–9.08%).

Treasury bill yields fell across most maturities at Wednesday’s auction: 3-month down 2bp to 7.93% (all Rs 40bn sold), 6-month down 8bp to 8.36% (all Rs 60bn sold) and 12-month down 1bp to 8.47% with Rs 7.48bn of Rs 20bn offered sold.

IMF Managing Director Kristalina Georgieva reaffirmed support for Sri Lanka in a meeting with Prime Minister Dr. Harini Amarasuriya in Davos. Labour Minister and Deputy Finance Minister Dr. Anil Jayantha Fernando also took part in the discussion.

Gold rose to a record above $4,800 per ounce (spot $4,821.26, earlier $4,843.67) as safe-haven demand and a softer dollar drove buying amid US-EU tensions over Greenland; expectations the Fed will hold rates also supported bullion.

Sri Lanka's rupee traded slightly stronger at 309.60/65 per US$ while government bond yields were broadly steady (e.g., 15.10.2029 quoted at 9.60/65%). The ASPI rose 0.23% to 23,678 and an auction of 125,000 million rupees in Treasury was ongoing.

Sri Lanka's central bank will present a report to Parliament showing inflation below 2% in Q1–Q2 2025 (with -1.1% in Q2 and 0.8% in Q3), missing its 5% floor. The achievement has drawn praise but also concerns about the central bank's exchange-rate and operating framework.

Standard Chartered says Sri Lanka's sovereign ratings outlook is likely to shift from Stable to Positive as debt-to-GDP falls below 100% by 2027. It expects external debt service under $3bn in 2026, reserves around $7.5bn by end-2026 and policy rates to stay on hold.

Sri Lanka earned Rs904bn from vehicle imports in 2025, above the Rs441bn originally expected, Deputy Economic Development Minister Nishantha Jayaweera said. The report ties the receipts and higher imports to central bank policy decisions and exchange-rate moves, noting depreciation from 290 to 310 LKR/USD.