News & market updates

Brent crude fell about 5% to just under $100 a barrel after US President Trump said negotiations to end the Iran-related conflict were progressing and Iran said “non-hostile” vessels could pass through the Strait of Hormuz.

The Central Bank held the OPR at 7.75% in its 2nd MPC review for 2026, leaving SDFR/SLFR and reserve requirements unchanged. Weekly T‑bill yields rose (91d 7.64%, 182d 7.95%, 364d 8.32%) in an undersubscribed auction; secondary bond market volatile and the rupee firmed slightly to ~Rs.313.8/314.5 with gross official reserves at $7.3bn.

Fitch warned a prolonged Iran conflict could lift Brent to an adverse scenario averaging $128/bbl in Q2 2026 and $100/bbl for the year, heightening downside risks to Asia‑Pacific sovereign credit profiles through higher inflation, weaker growth and strained fiscal balances.

Supply chain and shipping disruptions from the Middle East conflict are likely to keep Sri Lanka's import and energy costs elevated into Q2–Q3. Shipping routings add up to 21-day transit delays and bunker fuel costs have risen nearly 150%, while insurance and war-risk surcharges have also increased.

Central Bank Governor Nandalal Weerasinghe warned IMF programme conditions may change significantly at the upcoming fifth/sixth reviews as IMF staff visit Colombo Mar 26–Apr 9, citing Cyclone Ditwah and a >35% jump in energy prices that raised reconstruction costs and inflationary pressure. Completion of the combined reviews would unlock about US$700m in IMF tranches.

Stocks rose and Brent crude fell about 6% to $98.30/bbl after reports the U.S. sought a month-long ceasefire with Iran; S&P 500 futures were up 0.9% and European futures 1.2%. Bond yields eased a few basis points even as markets still price further central-bank rate hikes.

The Central Bank of Sri Lanka kept the Overnight Policy Rate at 7.75% and said low inflation (1.6% y/y in Feb) provides space to absorb higher energy costs, forecasting inflation will reach 5% in Q2-2026. It noted USD 7.3bn reserves, some rupee depreciation pressure and risks to tourism, trade and remittances.

Monetary Policy Board kept the Overnight Policy Rate unchanged at 7.75%. Inflation was 1.6% y-o-y in Feb 2026 and is expected to reach 5% in Q2-2026; the board cited higher global energy prices, Middle East conflict risks, and FX reserves of USD 7.3bn as key considerations.

ADB announced a financial support package including fast-disbursing budget support and reactivated trade and supply-chain finance (including for oil imports) to help developing member countries manage economic fallout from the Middle East conflict. The bank will use countercyclical resources and monitor energy, inflation and financial conditions.

Brent crude rose back above $100, climbing as high as $104 and trading around $102 a barrel amid conflicting reports about potential US–Iran talks.

The Cabinet approved forming a special expert committee chaired by Dr. Hans Wijayasuriya to drive energy sector development and to formulate national policies, strategies and implementation frameworks for the energy economy.

President Trump spoke with Indian PM Modi about the escalating Middle East situation, with both leaders stressing de‑escalation and the importance of keeping the Strait of Hormuz open for shipping. They agreed to stay in touch to pursue stability and restoration of peace.

The British High Commissioner offered maximum UK support for human resource training and development to reform Sri Lanka’s public service. The meeting also discussed renewable energy development in Puttalam, identifying the district for solar and wind farms and exploring offshore wind potential.

Laugfs Gas (LGL.N0000) will receive 8,000 tons of LPG at end-March and 21,000 tons in late April; combined with Litro Gas consignments the government says supplies will exceed monthly demand. Officials said distribution and storage coordination challenges remain.

Sri Lanka thanked Iran for an offer to supply oil but said it cannot accept because it has no ship to import; the government has floated tenders and expects fuel shipments to cover needs until end-April. The country has implemented fuel rationing, is exploring a G2G deal with Russia, and oil prices have risen about 35%, lifting transport and food costs.

Russia’s Deputy Energy Minister will visit Sri Lanka for formal talks on a government-to-government oil deal to address fuel shortages and price hikes. Sri Lanka has been constrained from buying Russian oil by fears of US trade retaliation and high third-party tanker insurance/logistics costs despite a temporary US waiver.

ADB announced a financial support package to help its developing member countries mitigate economic and financial impacts from the Middle East conflict, including fast-disbursing budget support and reactivated trade and supply-chain finance for oil imports. The bank will mobilize countercyclical lending and TSCFP support to address energy price volatility, supply disruptions, inflationary pressures and risks to tourism and trade.

Sri Lanka's cabinet approved an expert committee, led by Hans Wijesuriya, to prepare a framework to develop the energy economy after a slowdown in investment. The committee will include presidential advisors and ministry secretaries to align the plan with national policies and delivery frameworks.

The Planters’ Association urged a sustainable electricity tariff framework as the CEB has proposed a 13.6% tariff hike for Q2 2026, warning it would raise production costs for tea and rubber processors and hurt export competitiveness. Plantation companies (eg. Talawakelle) are increasingly investing in solar, mini‑hydro and efficiency measures to reduce grid dependence.

Fitch warns APAC sovereign credit profiles face heightened downside from a prolonged Iran conflict as higher oil prices and supply disruptions raise inflation, weaken growth and worsen public finances; an adverse scenario assumes Brent at about $128/bbl in 2Q26 and $100/bbl for 2026. Net fossil-fuel importers (e.g. India, Korea, Pakistan, the Philippines, Maldives, Thailand) would be hardest hit, while supply-chain and fertiliser disruptions could amplify inflation and food-security risks.

Global markets retreated as Brent rose ~4.2% to $104.21/bbl and U.S. crude to $91.93, while U.S. Treasury yields climbed, reversing a brief relief rally amid ongoing Middle East tensions. The dollar strengthened and spot gold fell about 1%.

Asian stock markets plunged after US President Donald Trump's ultimatum to Iran, with Japan's Nikkei down about 4% and South Korea's KOSPI down about 4.5%; Brent crude briefly topped $114/bbl amid fears of disruptions to the Strait of Hormuz.

Asian currencies weakened as the South Korean won fell to a 17-year low, closing at 1,517.3 per USD amid volatility from the Middle East crisis. Other regional currencies including the rupiah, rupee, peso and baht also saw pressure, with some central bank intervention stabilising markets.

President Anura Kumara Dissanayake directed officials to intensify public awareness and implement measures to cut electricity use during peak hours (6pm–10pm) to safeguard energy security amid global supply disruptions. Guidelines for government institutions and cuts to billboards/ornamental and non-essential street lighting were discussed.

Iran says it is ready to supply fuel and other essential goods to Sri Lanka if requested. The ambassador added the Strait of Hormuz remains accessible to friendly countries and Iran can assist the return of Sri Lankan nationals from Iran.

President Trump said he ordered US strikes on Iranian power plants postponed for five days after talks, and oil prices fell about 13–15% (Brent to roughly $96/bbl, WTI to $85.28/bbl session lows). The IEA warned the conflict has cut global oil supplies by about 11m bpd and called the crisis worse than the 1970s shocks.

WindForce PLC received a Letter of Award on 20 March 2026 to develop a 10 MW/40 MWh grid-scale BESS in Panadura valued at Rs.1.73 billion under a 15-year BOO contract. This is WindForce's 13th standalone BESS project under the national program, financed on an 80:20 debt-to-equity basis with the company holding 100%.

ASPI fell 1.33% to 20,364.97 as the market reacted to Middle East tensions and rising crude oil prices. Market turnover was Rs.2.37bn, the market has lost over Rs.1.1tn since 28 Feb, primary negative contributors were DOCK, JKH, RIL, DIAL and CFIN, while JKH, SINS and DIAL saw largest foreign outflows and PKME, WIND and TAP largest inflows.

Oil prices fell more than 13% after U.S. President Donald Trump said he would postpone military strikes on Iranian power plants and energy infrastructure; Brent dropped about $17 (15%) to around $96/bbl and U.S. WTI fell about $13 (13.5%) to $85.28.

Sri Lanka's rupee weakened to 313.00/314.00 per USD from 311.80/312.00, while government bond yields recovered and oil prices fell below $100 after the US announced a pause in planned strikes on Iran.