Foreign investors sell Sri Lanka rupee bonds for second week 

ECONOMYNEXT – Foreign investors sold Sri Lanka rupee bonds for the second straight week in the week ended on September 25, Central Bank data showed, despite a slight appreciation on the  rupee currency.

It was the second time they sold the bonds in the last 15 weeks.

Offshore investors sold a net 9,169 million rupees (US$27.8 million) worth of Sri Lanka rupee bonds, extending the net foreign selling to Rs.16.5 billion in he last two weeks.

Before the two weeks, they bought 92 billion rupees (US$280 million) worth rupee bonds in the previous 13 straight weeks.

The outflows reduced the foreign holdings in government securities to 196.9 billion rupees, down from the  highest figure the Central Bank published in its Weekly Economic Indicators two weeks ago.

Analysts said the net outflows started after tghe rupee depreciation.

The rupee currency’s selling rate fell to a near three-year low of 354 against the U.S. dollar on May 21 before recovering and gaining to the 332 level in the week ended on September 11.

However, last week it gained slightly against the U.S. dollar.

The rupee had been steady for more than three years before the sharp depreciation in May with the Central Bank citing higher oil and vehicle imports amid a lingering conflict in the Middle East.

The rupee has fallen 6.2 percent through September 25 this year.

Globally, investors are cautious about economic growth due to the impact of the latest Middle East escalation.

However, the island nation has enjoyed a total inflow of around 55.7 billion rupees into rupee bonds so far this year, following a net inflow of 71.5 billion rupees last year.

The island nation has seen an uptick in inflation in the last five months following a nearly 50 percent hike in fuel prices.

The government reduced fuel prices twice, in the last weeks of June and August.

The Central Bank raised its key monetary policy rate by 100 basis points in May to curb inflationary pressure stemming from higher demand.

Before the May rate hike, the Central Bank kept its key policy rates steady since May 2025 after reducing them by 825 basis points over 24 months since June 2023 and foreign investors have been buying rupee bonds despite slight depreciation in the local currency (Colombo/September 29/2026)