News & market updates

Secondary Treasury bond yields fell amid strong buying and higher volumes; the Treasury announced a Rs.205 billion bond auction for 12 January. The rupee strengthened to Rs.309.10/309.50, net liquidity surplus was Rs.168.45 billion and secondary bond turnover was Rs.76.86 billion on 7 Jan.

Economist Talal Rafi delivered a keynote in Slovakia warning global public debt reached $102 trillion in 2024 (up $5tn) with record interest payments of $921bn. He said developing-nation debt is rising twice as fast as advanced economies and urged stronger IMF capacity.

Sri Lanka's rupee closed stronger at 309.10/50 to the US dollar (from 310.05/15) on Thursday, while government bond yields fell across maturities (e.g. 15.12.2026 at 8.45-55%, 15.03.2031 at 9.85-93%).

Deputy Finance Minister Anil Jayantha defended the central bank’s 5% inflation target as appropriate for a developing, open economy and supportive of growth; critics warn the higher target risks exchange-rate depreciation and external instability.

Central Bank of Sri Lanka forecasts 4-5% economic growth in 2026, citing private credit expansion, a surplus external current account and gross official reserves above US$6.8bn, while warning of risks from Cyclone Ditwah. Inflation is expected to reach the 5% target by H2 2026 and the CBSL prioritises data-driven monetary policy and resilience measures.

Sri Lanka's central bank will review the inflation-target agreement with the government in 2026 as required by the new monetary law. The bank had sought a 5%–7% target previously; there are calls to lower the target and introduce a ceiling to curb currency depreciation and avoid a possible second default.

Central Bank Governor Namdalal Weerasinghe said Sri Lanka’s economic growth for 2026 will be around 4–5%. He announced the estimate while unveiling the Central Bank’s policy agenda, noting the projection is higher than IMF and World Bank predictions.

Sri Lanka's rupee opened weaker at 310.12/18 per USD (from 310.05/15), while government bond yields opened marginally higher — e.g., the 15.03.2028 bond at 9.13/18% and the 01.07.2030 at 9.75/80%. The ASPI was up 0.98% at 23,521 and the S&P SL20 was up 1.42% at 6,454.

President Anura Kumara Dissanayake ordered officials to develop mechanisms to register unregistered SMEs and to accelerate access to a 3% interest credit scheme for Ditwah-hit businesses. He also instructed housing reconstruction to begin from 9 January and expedited crop compensation payments.

Weekly Treasury Bill auction averages rose for a third straight week — 91-day 7.88%, 182-day 8.44%, 364-day 8.47% — with the Rs.100bn auction fully subscribed. Secondary bond yields eased, net liquidity surplus was Rs.158.71bn and USD/LKR closed at 310.05/310.15.

Parliament approved amendments to the Colombo Port City law capping tax holidays at 15 years for billion-dollar investments and imposing shorter, rule-based terms for smaller projects. The law defines investment bands (A $1bn; B $500m; C $100m; D $25m) and offers reduced rates for secondary projects, while officials note currency instability and broader fiscal/IMF policies could still affect investment appetite.

Sri Lanka's rupee weakened to 310.05/15 per USD while government bond yields eased on mid‑tenors; the 2028s closed around 9.20-9.27% and the 2029s at about 9.65-9.73%, with the 2026 bond flat at 8.50-8.60%.

Sri Lanka Treasury bill yields rose at Wednesday's auction: the 6-month yield climbed 17bp to 8.44%, the 3-month rose 14bp to 7.88% and the 12-month rose 2bp to 8.47%. Auctions sold 10.76 billion rupees (offered 20bn) for 3M, 80.45bn (offered 50bn) for 6M and 8.77bn (offered 30bn) for 12M.

Government is considering allowing EPF members the option of a regular pension/annuity instead of a lump-sum withdrawal at retirement, Labour Deputy Minister Mahinda Jayasinghe told Parliament. The National Labour Advisory Council is reviewing Act amendments while the EPF's net worth rose to Rs.4,375.7bn at end-2024 and the member interest rate was 11% for 2024.

Wealthtrust Securities (WLTH.N0000) begins trading today on the CSE Diri Savi Board after an IPO that raised about Rs.500.8m (71,548,244 shares at Rs.7) and was oversubscribed 14.9 times. Proceeds will strengthen its capital base to absorb market and interest-rate risks and expand government securities trading.

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.

Central government debt fell to 93.1% of GDP by September 2025, down from 96.1% at the start of the year. The rupee weakened (to ~302.6 by Sept and ~310 since) while domestic debt rose by Rs 391bn to Rs 18,701bn and foreign debt by Rs 545bn to Rs 10,974bn, expanding nominal debt by Rs 937bn.

Secondary bond market yields were mixed: belly (2029-2030) fell while the short end (2027-2028) rose, resulting in a flatter curve; weekly Treasury Bill auction offers Rs.100 billion (Rs.20bn 91-day, Rs.50bn 182-day, Rs.30bn 364-day). Money-market liquidity rose to Rs.175.21bn (SDFR deposits Rs.200.21bn), overnight rates around 8.0%, and USD/LKR traded near Rs.310.00.

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.

The Central Bank of Sri Lanka extended the suspension of Perpetual Treasuries Limited from acting as a primary dealer for a further six months from 05 January 2026 to allow continued investigations into past bond dealings.

WealthTrust Securities PLC (WLTH.N0000) will begin trading on the CSE Diri Savi Board tomorrow after an IPO that raised about LKR 500.8 million (71,548,244 shares at LKR 7.00), which was oversubscribed 14.9 times.

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.

Sri Lanka's budget deficit will rise 1.4 percentage points to 6.5% of GDP in 2026 after an extra 500 billion rupees of Cyclone Ditwah relief and recovery spending. Capital expenditure is raised to 5.0% of GDP and authorities warned of rupee depreciation and exchange-rate policy concerns.

Sri Lanka's rupee opened weaker at 309.90/310.10 per USD while local bond yields edged lower on increased buying interest, with various government bonds quoted around 9.00%–10.55%. Rs.100,000 million T-bills will be auctioned on 7 Jan; ASPI up 0.36%.

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.

Secondary Treasury bond trading opened with yields edging up but capped by buying—e.g., 01.06.26 at 8.45%, 01.05.27 at 8.95% and 01.11.33 around 10.50%; total secondary market volume was Rs.16.21bn. Money-market net liquidity surplus was Rs.135.80bn (Rs.149.20bn at SDFR 7.25%), call/repo ~8.03%-8.04%, and USD/LKR closed at 309.95/310.05.

The US Congressional Budget Office projects net interest costs will rise from $881 billion in FY2024 to $1.0 trillion in FY2026 and to nearly $1.8 trillion by 2035. Interest payments in 2024 already exceeded Medicare and defence outlays, making net interest one of the largest federal spending items.

The Central Bank of Sri Lanka has extended the suspension of Perpetual Treasuries Ltd from acting as a primary dealer for a further six months from 4:30pm on 5 January 2026 to continue its ongoing investigations.