News & market updates

Sri Lanka's rupee was quoted at 336.35/40 to the US dollar on Thursday and bond yields fell, with quoted yields on maturities from 2029–2036 around 10.95%–11.95%.

The World Bank approved $150m in financing (REGROW DPO) to support Sri Lanka's reform agenda to boost investment, competitiveness, high-value exports and jobs. The first of three operations focuses on reducing trade barriers, improving the investment climate, strengthening the financial sector and power competitiveness.

Treasury Bill weighted average yields rose for a second consecutive week—91-day and 182-day bills up 9bps to 10.23% and 10.30%, and the 364-day up 3bps to 10.20%—with the auction raising the full Rs.100bn offered. Secondary bonds rallied on large block buying and the rupee slipped to LKR 336.20/336.40.

The Cabinet approved procurement to introduce a technology-based supervisory solution for the Central Bank's Banking Supervision Department with technical assistance from the ADB. The platform is intended to modernise banking regulation and improve document preparation, review, storage and retrieval.

The Central Bank of Sri Lanka named 25 companies and platforms, including Infinity Rover Ltd., as operating illegal pyramid schemes under Section 83(C) of the Banking Act, warning the public against these specific firms and apps.

Colombo Stock Exchange closed with the ASPI down 0.06% at 22,229.71 while the S&P SL20 rose 0.05% to 6,209.85; market turnover was Rs.1.52bn and capital goods led turnover at Rs.834.9m. Dialog, Melstacorp and Bukit Darah were positive contributors, Aitken Spence, DFCC Bank and Ceylon Tobacco were top decliners, crossings were recorded in Hemas, Windforce and Printcare, and SANASA Life raised Rs.500m via subordinated debentures to meet regulatory capital requirements.

Sampath Bank won Sri Lanka's Best Retail Bank, Best Commercial Bank and Best Corporate Governance – Sri Lanka at the World Finance Banking Awards 2026. The bank said the honours reflect its governance framework, continued digital capability expansion and over a decade of consistent retail and commercial performance (12th year for the retail and commercial titles).

Carson Cumberbatch approved a second interim dividend of Rs.7.40 per ordinary share, totalling Rs.1.45 billion and exempt from withholding tax. Colombo markets were up midday (ASPI +0.08% at 22,260.75) with Dialog, Melstacorp, Sanasa Development Bank and Sampath as top positives and Ceylon Tobacco, DFCC and Aitken Spence as negatives; turnover Rs.388.5mn, capital goods led at Rs.62.4mn.

Union Bank (UBC) launched the Union Bank Pension Loan offering government and other pensioners up to Rs. 8 million with repayment up to 15 years, low interest and no personal guarantor; benefits include Rs.30,000 of annual PickMe rides, a Rs.7,000 yearly Nawaloka Hospitals health package and a pre-approved credit card.

Assetline Finance PLC posted PAT of Rs. 3,084.6m for the year ended 31 Mar 2026, up 13.6%, and successfully issued and listed a Rs. 5 billion debenture on the Colombo Stock Exchange. Total assets rose 71% to Rs. 89,523.4m and the lease/loan portfolio grew 85.1% to Rs. 79,195m, with Net Stage 3 loans at 0.98%.

Sampath Bank PLC was named Sri Lanka's Best Retail Bank and Best Commercial Bank for the 12th year and won Best Corporate Governance – Sri Lanka 2026 at the World Finance Banking Awards. The awards cite the bank's performance, innovation, customer value and governance, noting strengthened digital capabilities and governance framework.

Sri Lanka's rupee closed at 336.20/40 to the US dollar on Wednesday; bond yields were broadly steady, with the 15.09.2027 issue at 10.35/50%, 15.03.2028 at 10.55/65%, 15.12.2029 at 11.00/05% and 01.08.2030 at 11.30/38%.

Cabinet approved procuring a services provider to digitize the Central Bank's Banking Supervision Department with technical assistance from the Asian Development Bank. The move aims to replace largely physical record management and improve supervisory efficiency following an ADB-assisted needs assessment.

Bank of Ceylon will spend $10 million to install a new core banking system, with cabinet approval to call for tenders and a planned five-year rollout. The move replaces a 22-year-old system used across its retail, corporate and overseas branches.

Yields on Sri Lanka Treasury bills rose across maturities at Wednesday's auction and all 100 billion rupees offered were sold. The 3-month rose 9bps to 10.23%, the 6-month rose 9bps to 10.30% and the 12-month rose 3bps to 10.20%.

The Central Bank of Sri Lanka declared Infinity Rover (Pvt) Ltd an illegal/prohibited pyramid scheme and listed numerous other companies and apps as prohibited schemes under Section 83(C) of the Banking Act.

Sri Lanka's current account recorded a US$194 million deficit in May 2026, the second consecutive monthly deficit and leaving a US$97 million deficit for January–May. The trade gap widened to US$4.7bn (Jan–May), fuel import spending rose 112% YoY in May, tourist earnings fell 5.1% YoY in May, remittances rose 26% YTD, reserves were US$6.9bn and the rupee was down 7.9% YTD.

The World Bank approved US$150 million for the REGROW DPO to support Sri Lanka's reform agenda focused on boosting investment, competitiveness and jobs. The operation backs reforms to reduce trade barriers, improve the investment climate, strengthen the financial sector and enhance power sector competitiveness to lower energy costs.

Fitch says Asia investors in June 2026 are focused on AI disruption, private credit expansion and sovereign risk, flagging AI and digital-infrastructure overspend as emerging credit risks. Investors also flagged opacity and liquidity risks in private credit and noted sovereign vulnerabilities in Indonesia amid currency and policy concerns.

Sri Lanka's telegraphic transfer rate was 331.6619/341.3051 LKR per US dollar (buy/sell); euro and pound rates were also reported. A Rs.100,000 million Treasury bill auction is ongoing.

Sri Lanka's current account posted a US$194m deficit in May 2026, the second consecutive monthly deficit, driven by a wider trade gap and a smaller services surplus despite higher remittances. The cumulative trade deficit reached US$4.7bn Jan–May 2026, fuel imports rose 112% YoY in May, and gross official reserves were US$6.9bn at end-May.

Sri Lanka sold an additional Rs6 billion of on-tap Treasury bonds, bringing the week's total sales to Rs66 billion; the 15 Oct 2030 bond yielded 11.44% and the 15 Mar 2035 bond yielded 11.88%, with settlement on July 1.

The IMF said the Seventh Review of Sri Lanka's Extended Fund Facility will assess program performance and place greater emphasis on growth-oriented reforms, including fiscal, monetary and governance measures and energy pricing. Only the Seventh and Eighth reviews remain and the IMF will continue policy advice and technical assistance.

IMF Mission Chief Evan Papageorgiou said exchange-rate flexibility should remain the primary defence and foreign-exchange intervention should be limited to addressing excessive volatility. The IMF said monetary policy should be data-dependent and inflation will be assessed against the Central Bank's consultation bands.

President Anura Kumara Dissanayake reaffirmed the Government's commitment to completing the IMF-backed Extended Fund Facility program and said economic stabilisation must deliver tangible improvements in living standards, with under a year remaining on the EFF.

Customs said the alleged nearly $1 billion in advance-payment 'phantom imports' since 2023 fell outside its remit and would instead be visible to commercial banks and the Central Bank's Financial Intelligence Unit. Customs noted the regulatory gap has been closed by restricting advance payments to importers registered with Sri Lanka Customs.

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.

Opposition Leader Sajith Premadasa urged a whole-of-government, science-based National Climate Resilience strategy, warning of a limited window before a likely strong 2026–27 El Niño and proposing anticipatory governance, reservoir/water management, climate-smart agriculture, early warning systems and a disaster intelligence centre.

Colombo market opened down 0.65% as the ASPI fell 146.53 points to 22,263.28 with turnover over Rs.1.7bn and foreign net outflow of Rs.466.1m; Windforce, CIC and Hayleys were main negative contributors while Windforce, Colombo Dockyard and Sathosa Motors led turnover.