Sri Lanka sees foreign buying in rupee bonds for third week
ECONOMYNEXT – Foreign investors bought Sri Lanka rupee bonds for a third straight week in the week ended on October 16, Central Bank data showed, despite slight depreciation pressure on the rupee currency.
With the latest inflows, the island nation has seen net foreign buying in 16 of the last 18 weeks.
Offshore investors bought a net Rs. 364 million (US$1.1 million) worth of Sri Lanka rupee bonds in the week ended on Friday (16).
The net buying extended the net foreign inflows into the rupee bonds to Rs. 5.5 billion in the last three weeks following a Rs. 16.5 billion outflow in the previous two weeks.
The inflows helped boost foreign holdings in government securities to 202.4 billion rupees.
Analysts said foreign investors bought fewer rupee bonds compared to the previous two weeks amid slight downward pressure on the local currency.
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 6.4 percent through October 16 this year.
Globally, investors are cautious about economic growth due to the impact of the latest Middle East escalation.
The island nation has seen a total inflow of around 61.1 billion rupees into local currency bonds so far this year, following a net inflow of 71.5 billion rupees last year.
The Central Bank raised its key monetary policy rate by 100 basis points in May to curb inflationary pressure stemming from higher demand.
The island nation has seen an uptick in inflation in the last six months following a nearly 50 percent hike in fuel prices.
The government raised fuel prices in the last week of September after reducing them in June and August.
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. (Colombo/October 18/2026)