News & market updates

Opposition Leader Sajith Premadasa called for immediate suspension of the parate law and a targeted relief package to save MSMEs, warning rising fuel prices and higher borrowing costs threaten about 4.5 million MSME entrepreneurs who contribute around 52% of the economy. He urged structured debt restructuring and direct Treasury support for affected businesses.

ADB will provide $100m in additional budget support, raising its planned 2026 budget support for Sri Lanka to $480m; it is also fast-tracking a $200m emergency loan and scaling its annual program to over $1bn to back infrastructure, reforms and human capital.

CSE extended its rebound as the ASPI rose 3.79% (797.62 pts) to 21,868.85, with market value gaining Rs.284.1 billion in the session and recouping about 48% of the Rs.1.1 trillion loss since the Middle East conflict began. Commercial Bank, Hatton National Bank, Melstacorp, John Keells and Hayleys led gains; turnover topped Rs.6.4bn and foreigners were net sellers (Rs.525m).

The Central Bank of Sri Lanka held the policy rate at 7.75% and said gross official reserves stand at $7.3bn, providing buffers against external shocks. It projects headline inflation around 2% in March and expects inflation to converge to the 5% target by Q2 2026, while warning risks from Middle East energy volatility could change the outlook.

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.

CBSL Governor said the IMF mission (26 Mar–9 Apr) may seek a staff-level agreement to combine the Fifth and Sixth reviews of Sri Lanka’s $2.9bn EFF, potentially unlocking about $700m, and that recent external shocks (Middle East conflict, energy prices) could require significant program adjustments. He noted gross official reserves of $7.3bn and that detailed discussions on external sector and targets are pending.

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.

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.

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.

Global stock markets rose after oil dipped and reports the US sent a 15-point peace framework for Iran, with Japan's Nikkei +2.9%, Hong Kong's Hang Seng ~+1% and major US/European indices around +1–1.4%. Gold has fallen about 13% to roughly $4,550 from a January peak above $5,000.

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.

ADB will provide $100 million in additional budget support to Sri Lanka, raising its planned 2026 budget support to $480 million. ADB is also fast-tracking a $200 million emergency assistance loan to restore transport networks and irrigation, and plans to scale up its program to over $1 billion to support infrastructure and reforms.

Colombo Stock Exchange jumped as ASPI closed up 3.79% at 21,868.85 and the S&P SL20 rose 3.81% to 6,134.23. Top positives included Commercial Bank, HNB, Melstacorp, John Keells and Hayleys; turnover was Rs.6.41bn with highest activity in food, beverages & tobacco.

Sri Lanka's rupee recovered to 313.00/50 against the US dollar and bond yields opened lower as oil prices fell, with the Central Bank keeping the Overnight Policy Rate unchanged at 7.75%. The ASPI was down 2.90% and an 80,000 million rupee T-bill auction was ongoing.

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.

Middle East war and near-closure of the Strait of Hormuz have caused port congestion that left hundreds of used cars (including luxury models) stranded or delayed into Sri Lanka, forcing diversions, offloads at alternative ports and higher freight and storage costs for exporters.

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.

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.

Secondary government bond yields swung amid Middle East tensions and ahead of the Central Bank's 2nd Monetary Policy Review due today, with the 15.02.28 maturity at 9.50% and longer maturities trading up to 10.90%. The weekly T-bill auction offers Rs.80bn (below ~Rs.87.17bn maturing) and USD/LKR closed around 314.00/314.40.

Sri Lanka's ASPI rose 3.38% to 21,784.11 and the S&P SL20 climbed 3.63% to 6,123.82; market turnover was Rs.2.3bn. Top contributors included Hatton National Bank, Commercial Bank, John Keells, Melstacorp and Dialog, while food, beverage & tobacco led turnover (Rs.834m).

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.

The ASPI rose 3.47% (706.26 pts) to 21,071.23, recovering Rs. 244 billion on reports of a possible de‑escalation in the Middle East; the S&P SL20 gained 3.91% to 5,909.23. Market turnover exceeded Rs. 4.2 billion with gains led by Commercial Bank, Sampath Bank, John Keells and Colombo Dockyard while foreigners were net sellers.

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.

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.