News & market updates

Secondary bond yields converged between 4- and 10-year maturities, flattening the yield curve as 4-year yields rose ~5bp while 10- and 11-year yields fell ~5bp. CCPI inflation rose to 6.8% y/y, net liquidity surplus was Rs.82.56bn and USD/LKR closed at 336.00/336.30.

Headline CCPI inflation rose to 6.8% YoY in June 2026, a three‑year high. CBSL said non-food inflation accelerated to 8.4% and food inflation to 3.6%, raised the policy rate in late May, and expects inflation to remain above the 5% target before easing amid elevated uncertainty from the Middle East conflict.

Union Bank of Colombo (UBC.N0000) launched the Union Bank Pension Loan allowing government pensioners to borrow up to Rs. 8 million with up to 15-year repayment, low interest, no guarantor and benefits including LKR30,000 annual PickMe rides and a LKR7,000 yearly health package at Nawaloka Hospitals.

IMF mission chief Evan Papargeorgiou urged Sri Lanka to 'stay the course' and sustain reform momentum after staff-level talks, saying the IMF has relaxed some EFF targets as fuel prices rose about 50% and monetary tightening may slow growth. He noted authorities have delayed reforms at loss-making SOEs including SriLankan Airlines, Ceylon Petroleum Corporation and Ceylon Electricity Board.

Sri Lanka's inflation rose to 6.8% in June 2026, the highest since June 2023 and close to the Central Bank's 7% upper target. The rise was driven by a ~47% fuel price hike and higher food and transport costs; the Central Bank raised its policy rate by 100bp.

Colombo headline inflation rose to 6.8% Y-o-Y in June 2026 (from 5.5% in May), with a 2.1% month-on-month increase driven by food (fish, vegetables) and non-food items amid energy price pass-through. The Central Bank projects inflation to remain above the 5% target near term before easing, with elevated uncertainty due to Middle East tensions.

IMF staff completed a June 24–30 visit, noting inflation rose from 1.6% y/y in Feb to 5.5% y/y in May after energy price increases and that authorities responded with a 100 bps policy rate hike and temporary on-budget relief (fuel, electricity, fertilizer, cash transfers). The IMF said sustaining reforms is critical and the Seventh Review of the EFF will assess program progress in the fall.

Foreign holdings of rupee government securities rose by Rs.14.51 billion in the week to 25 June — the largest weekly foreign inflow since 8 June 2023 — lifting total foreign holdings to Rs.135.86 billion. The Treasury Bond auction raised the full Rs.60 billion, flattening the yield curve; money-market liquidity improved and the rupee dipped.

Nations Trust Bank PLC allotted the full 150 million Basel III-compliant Tier 2 debentures, raising the maximum Rs.15 billion after exercising an oversubscription option. The unsecured, subordinated five-, seven- and 10-year debentures include a non-viability conversion feature; 112.5m were allotted preferentially.

Sri Lanka's CCPI rose to 5.5% in May (from 5.4% in April), driven partly by higher local energy costs, eroding real returns on typical savings. Wealth managers recommend diversifying into unit trusts (money-market, income/balanced and equity funds) to protect savings.

Asian stocks closed a strong quarter — Japan's Nikkei is set for a ~36% quarterly rise and South Korea's KOSPI about 65% — as a resurgent dollar (index +1.3% this quarter) pushed the yen to a four-decade low of 162.41 and sent gold sharply lower; Brent crude at $72.49/bbl.

The LMD-PEPPERCUBE Business Confidence Index fell 16 points to 132 in June, marking a 20-month low. The drop accompanies a 7.8% year-to-date rupee depreciation, fuel price hikes, central bank forex interventions (over US$223m sold in May) and elevated inflation risks.

Commercial Bank of Ceylon signed an MoU with Carmart to offer structured leasing for Peugeot and Leapmotor vehicles until 30 June 2027, including attractive interest rates, documentation concessions and a complimentary first-year-fee credit card. Carmart will add perks such as a complimentary full tank and free vehicle registration.

Sri Lanka's rupee closed at 336.30/70 to the US dollar, firming from 337.25/35 the previous day, while government bond yields were broadly steady; select maturities ranged from about 10.35% (15.09.2027) to 11.75% (15.03.2035).

Sri Lanka sold Rs60bn of government bonds: Rs45bn of 15 Oct 2030 bonds at an average yield of 11.44% and Rs15bn of 15 Mar 2035 bonds at an average yield of 11.88%; both issues are available on tap.

Sri Lanka sold Rs1,521 million of treasury bills on tap at average yields of 10.14% (3-month) and 10.21% (6-month), taking the week's total T-bill sales to Rs71.521 billion; settlement is June 26.

Asian shares pulled back after Apple raised iPad and MacBook prices (Apple shares slid 6.1%), denting chip stocks and sending MSCI’s Asia‑Pacific ex‑Japan index down 3.8%; the yen hovered near 40‑year lows and Brent crude fell to $73.9/bbl.

Sri Lanka's rupee was quoted at 336.90/337.00 to the US dollar on Friday, from 337.25/35 the previous day, while government bond yields were slightly higher — e.g. the 01.08.2030 bond at 11.25/30% (up from 11.20/25%).

Rs.60bn Treasury Bond auction set for 26 June: Rs.45bn 15-Oct-2030 (11% coupon) and Rs.15bn 15-Mar-2035 (11.5%); secondary bond yields held broadly steady, net liquidity surplus was Rs.65.36bn and USD/LKR around 337.30.

DFCC Bank introduced enhanced Garusaru Loans for eligible government pensioners, offering up to a 0.5% interest concession when customers open and maintain a DFCC Junior Savings Account with savings from Rs.2,000/month or via initial deposit/standing order. The change links concessionary loan rates to savings commitments to encourage long-term financial planning for dependents.

Sri Lanka's rupee closed at 337.25/35 to the US dollar in the spot market on Thursday, slightly weaker than 337.00/75 the previous day. Government bond yields were broadly steady, e.g., 15.09.2027 at 10.40/50%, 15.03.2028 at 10.50/65% and 01.08.2030 at 11.20/25%.

Treasury bill yields rose across maturities at the weekly auction — 91-day up 12bps to 10.14%, 182-day to 10.21% and 364-day to 10.17% — with the full Rs.70bn offered sold and bids 1.86x. Money-market net liquidity was Rs.61.04bn and USD/LKR closed at 337.00/337.75.

Nations Trust Bank PLC's Basel III-compliant Tier 2 subordinated debenture issue attracted applications worth Rs.19.56 billion, oversubscribing the maximum Rs.15 billion issue (~1.3x). The five-year Type A tranche drew strongest demand (173.71m debentures), with subscriptions via cheques/RTGS and bank guarantees.

Asian equities surged after strong Micron and Qualcomm earnings eased AI-related worries, lifting MSCI Asia-Pacific ex-Japan about 1.6% with Japan's Nikkei >4% and South Korea's KOSPI +5.5%. Oil fell to roughly $72.5/bbl and gold slid below $4,000 amid a firmer dollar and lingering rate-hike expectations.

Sri Lanka's rupee was quoted at 336.75/337.50 to the US dollar (from 337.00/337.75), with the telegraphic transfer at 333.00/342.00; local government bond yields edged slightly lower — e.g., the 01.08.2030 quoted at 11.19/23% (down from 11.20/25%).

Seylan Bank PLC has joined the Colombo EV Motor Show 2026 as the event's official banking and leasing partner and will offer tailored EV leasing packages with special interest rates, discounts, fast-track approvals and up to seven-year repayment terms.

Sri Lanka’s Treasury bill yields rose at Wednesday’s auction while all 70 billion rupees offered were sold: 3M 10.14% (+12bp, 35bn sold), 6M 10.21% (+5bp, 25bn sold), 12M 10.17% (+1bp, 10bn sold).

Sri Lanka's rupee closed weaker at 337.00/75 to the US dollar, down from 335.15/40 the previous day; bond yields were broadly steady, with the 15.12.2029 bond at about 10.90/11.00% and other long-dated yields around 10.50–11.75%.

Fitch Ratings says US consumer spending growth is slowing as inflation erodes real incomes, with real spending easing to 1.4% qoq annualized in 1Q26 and Fitch forecasting 1.7% growth for 2026. Lower oil prices could ease the squeeze, but falling savings and rising auto and credit-card delinquencies point to uneven spending.

Sri Lanka's goods and services exports rose 18.3% year-on-year in May to US$1,570.6 million, with merchandise at US$1,223.5m and services US$347.2m. The EDB reported estimated export earnings of US$7,393.4m (+7.6% YTD) and launched the NEDP 2026–2030.