News & market updates

Oil prices jumped over 3% after Iran’s Revolutionary Guards said they targeted a U.S. airbase; Brent rose $3.51 (3.72%) to $97.80/bbl and WTI rose $3.31 (3.73%) to $91.99 amid supply concerns and falling U.S. crude inventories.

IMF Executive Board completed the combined Fifth and Sixth reviews of Sri Lanka’s EFF, unlocking SDR508 million (≈US$695m) in immediate financing. Program performance was generally strong, but some continuous criteria were missed and risks from the Middle East war and Cyclone Ditwah weaken the outlook.

IMF approved a US$695m disbursement to Sri Lanka under its EFF despite breaches including intensified import controls and a cyberattack that led to a missed US$2.5m external payment; authorities requested a waiver and pledged corrective actions.

Asian shares rose and Brent crude traded near $100/bbl as markets awaited developments in US‑Iran talks and central bank commentary on inflation and interest rates. Investors also tracked currency moves, a likely RBNZ rate hold and gains in gold.

Central Bank Governor Nandalal Weerasinghe said the IMF-supported EFF program allows flexibility for policy adjustments, including targeted subsidies and revisions to key performance targets. He said the IMF Executive Board will approve the combined fifth and sixth reviews on Wednesday and that NIR targets and fuel pricing remain under periodic review.

Central Bank hiked the OPR by 100bps to 8.75%; T-bill yields rose sharply (91-day 9.36%, 182-day 9.68%, 364-day 9.83%) and the weekly auction was undersubscribed, while the secondary bond market turned bearish; USD/LKR closed around 324.50/326.00.

Digital Mobility Solutions Lanka (PickMe) posted FY25/26 revenue of Rs.8.7bn (+49%), net profit of Rs.2.2bn (+88%) and GTV of Rs.84.5bn, distributing over Rs.73bn to independent earners; the Board proposed a final dividend of Rs.2.60 (total Rs.4.30).

Cabinet approved the "Surakimu Lanka" National Energy Security Mission to cut fuel import costs and boost energy resilience by shifting demand toward renewable (solar/hydro) generation, improving energy efficiency and coordinating public awareness and state agencies.

Ceylon Petroleum Corporation says Sri Lanka has sufficient fuel stocks to meet domestic demand until end-July; two crude shipments are due on 28 and 31 May and a sharp near-term rise in domestic fuel prices is not expected.

Tokyo Cement reported FY26 turnover of Rs.61,011m (+22%) and 4Q turnover of Rs.17,623m (+36%), with FY26 PAT of Rs.2,580m (down from Rs.3,459m). Profitability was hit by rupee depreciation, higher material, fuel and financing costs even as volumes rose 28% and national cement consumption grew 19% to 5.62m MT.

Brent crude fell 6% to $97.43/bbl as hopes of a US–Iran deal eased supply fears around the Strait of Hormuz. Global stocks rose and gold climbed 1.46% to $4,574/oz amid the moves in energy and currency markets.

Former CBSL Governor Indrajit Coomaraswamy said recent rupee depreciation was driven mainly by external shocks from the Middle East conflict and amplified by market overreaction, noting usable reserves have risen to about $5.3 billion. He warned inflation has risen from 2.2% to 5.4% and the Monetary Policy Board may tighten policy if inflation breaches the target band.

The Central Bank of Sri Lanka said banks increased their willingness to lend in 1Q 2026, with loan demand rising across retail, corporate, SME and SOE sectors and overall NPLs declining; banks expect lending to rise further in 2Q while warning that geopolitical tensions and supply disruptions pose risks.

The Sri Lankan rupee strengthened for a second session, with interbank spot at Rs. 325.50/Rs. 327.00 (from Friday's Rs. 329.00/Rs. 335.00) and TT rates easing to Rs. 326.01/Rs. 336.42. Analysts say external buffers, expected CBSL rate hikes and easing oil prices reduce the risk of a renewed BOP crisis; CBSL issued an advisory against oversimplified narratives on money printing and exchange rates.

Brent crude rose nearly 2% to $97.56/bbl after U.S. strikes on boats and missile launch sites in southern Iran, raising supply-risk concerns. The moves heighten market uncertainty over shipping through the Strait of Hormuz even as talks seek a deal to reopen routes.

Central Bank raised the Overnight Policy Rate by 100bps to 8.75%. The board cited supply-driven inflation (5.4% y/y in April) from high global oil prices, stronger credit-driven demand, external pressures including fuel-import driven trade deficits and recent rupee depreciation; reserves stood at USD 6.8bn.

Sri Lanka’s central bank raised the Overnight Policy Rate by 100bps to 8.75% to address rising inflation, credit expansion and external pressures; the statement cited 5.4% y/y inflation in April, high fuel prices, a wider trade deficit and gross official reserves of USD 6.8bn.

Asia Asset Finance PLC is offering free PickMe rides for Fixed Deposit customers from home to the nearest branch and back across Sri Lanka. The initiative, in partnership with app-based PickMe, aims to improve customer convenience amid rising transport and fuel costs.

Sri Lanka unveiled South Asia's first solar hybrid bakery oven (solar + biogas) on 22 May, aimed at replacing fossil-fuel baking and supporting sustainable livelihoods and reduced import reliance. The project, led by Incitare, GRFC, German Tech Kilinochchi and GIZ, includes donations, local production and training.

Tokyo Cement Group reported Q4 turnover of Rs.17,623mn (+36% YoY) and PAT of Rs.577mn; for FY it posted turnover of Rs.61,011mn (+22%) and PAT of Rs.2,580mn, citing currency depreciation and higher material and fuel costs that weighed on margins.

Sri Lanka's Central Bank urged the public not to be misled by claims it has 'printed money', saying money supply and exchange rates require specialist technical analysis. The statement comes ahead of a monetary policy meeting amid speculation the Bank may tighten policy to support the rupee and curb cost‑push inflation after a fuel price hike.

JAAF said Sri Lanka apparel exports fell 4.72% in April 2026 to US$328.15m and were down 7.47% to US$1.53bn for Jan–Apr 2026. The association urged policy consistency, energy cost reforms, trade facilitation, skills development and market diversification to restore competitiveness and target US$5bn.

Oil fell about 6% to two-week lows as optimism grew that the US and Iran are moving closer to a peace deal; Brent dropped to $97.69/bbl (-5.7%) and WTI to $90.85/bbl (-6%). Analysts say normal flows through the Strait of Hormuz and repairs to damaged facilities could still take months.

JB Securities CEO Murtaza Jafferjee said Sri Lanka must accept painful economic adjustments to restore external stability, attributing the rupee depreciation to current policy settings and urging market pricing and targeted support instead of broad subsidies.

The Central Bank of Sri Lanka intervened in FX markets and the rupee surged as much as 2.7% on Friday, reversing a nine-day slide and becoming Asia's best-performing currency; CBSL data showed YTD depreciation widened from 4.5% (15 May) to 7.2% (22 May).

PodHUB and Dongfeng Motor Corporation (via Euro Motors) launched 'Driving Tomorrow', a podcast on Sri Lanka's shift to electric mobility; the debut episode features Omal Balapatabendi describing how EVs removed dependence on fuel queues and restored daily mobility.

Foreign investors sold about US$13.9m (4,580 million rupees) of Sri Lanka government securities in the week to May 21 amid depreciation pressure on the rupee. The currency is down over 7% YTD and higher inflation after a ~35% fuel price hike has increased pressure on the central bank ahead of its policy meeting.

President Anura Kumara Dissanayake said Sri Lanka faces external pressures from the Middle East conflict—higher oil and import costs and rupee depreciation—but rejected a repeat of the 2022 collapse, noting Central Bank reserves near $7bn and a $700m inflow expected; he assured no shortages of fuel, gas, milk powder or fertiliser.

Deputy Finance and Planning Minister Dr. Anil Jayantha Fernando defended Sri Lanka's flexible exchange rate and independent monetary policy amid rupee pressure, noting the interbank rate averaged Rs.330/USD (bids Rs.327, offers Rs.332). He warned fuel import costs could hit $521m in May, forecast remittances above $9b and expected IMF tranche approvals.

National consumer price inflation (NCPI) rose to 4.7% year‑on‑year in April from 2.4% in March, driven by higher fuel, electricity and transport costs; non‑food inflation climbed to 7.8%. Transport contributed 1.69 percentage points and housing/water/electricity/gas contributed 1.26 percentage points to headline inflation.