News & market updates

Fitch warned the Iran conflict could raise credit risks for emerging markets such as Sri Lanka by raising energy prices and disrupting remittances, exchange rates, fiscal subsidies and access to international finance.

The Cabinet approved a 'Committee on Economic Surveillance' chaired by Dr. Anil Jayantha Fernando to monitor and assess potential economic impacts on Sri Lanka from the Middle East conflict. The committee will review sector risks and submit policy recommendations to the Cabinet.

Sri Lanka's rupee strengthened to 310.95/311.05 per USD (from 311.60/311.90) and government bond yields fell across maturities (e.g., the 15.09.2027 bond to 8.45–8.50% from 8.80–8.90%). A Rs130,000 million Treasury bill auction is scheduled for March 11; yields declined following a global energy price drop.

Sri Lanka's rupee strengthened to 311.0/20 per USD (from 311.60/90) and secondary government bond yields fell (e.g. 15.02.2028 at ~9.05–9.09% from ~9.20–9.26%) as global oil prices eased and geopolitical tensions subsided.

Gross official reserves rose to $7.28bn at end‑February, a six‑year high and up from $6.8bn in January, boosted by a ~$1.4bn swap with China. The CBSL estimates $2.13bn of reserve outflows over the next 12 months and a $3.9bn short position in FX forwards/futures.

Frontier Research warned that a sharp rise in global oil prices from the Middle East conflict could raise Sri Lanka's petroleum import costs and push up inflation via higher transport and electricity prices. The firm also flagged risks to tourism from rerouted flights and higher travel costs, which could weaken external sector earnings.

Secondary bond yields rose sharply after Brent crude jumped over 15% above $100/bbl, with key maturities trading in ranges from 8.60% to 11.00% and a Rs.130bn Treasury bond auction scheduled (1 Mar 2030, 15 Jun 2034, 15 Aug 2036). Net liquidity was Rs.334.72bn and USD/LKR closed at 311.60/311.90.

Brent crude jumped past $110/bbl in March 2026, prompting Sri Lanka to raise diesel 7.8% and petrol 10%, which widens the import bill, pressures reserves and has devalued the rupee. The shock raises energy and transport costs, risking higher inflation and strain on fuel importers and the power sector.

Sri Lanka's rupee weakened to 311.60/90 per US dollar and government bond yields rose after global energy prices increased; selected yields included the 15.10.2029 at 9.60–9.70% and the 01.06.2033 at 10.60–10.70%.

CB Governor P. Nandalal Weerasinghe told Bloomberg (7 Mar 2026) Sri Lanka has sufficient policy buffers—stronger foreign reserves, flexible policy and exchange-rate flexibility—to absorb external shocks; inflation is about 1.6% and IMF talks may be needed if shocks intensify.

Workers' remittances rose 33% YoY to $729m in February—the highest February inflow on record—and first two months' inflows reached $1.48bn, up 32% YoY, bolstering foreign-exchange liquidity amid CBSL policy shifts that encouraged formal transfers.

Commercial Bank MD/CEO Sanath Manatunge will moderate a panel at the Sri Lanka Institute of Directors forum on 10 March where Sir Mark Tucker will deliver the keynote. The session also features Indrajit Coomaraswamy and AIA Insurance Lanka CEO Chathuri Munaweera.

Secondary bond yields closed higher last week, with 2028 tenors trading around 8.95%–9.20% and long-end yields rising to about 10.65%–10.80%. Weekly T-bill rates held broadly steady (91d 7.63%, 182d 7.92%, 364d 8.23%), the auction was undersubscribed (accepted Rs.55.33bn) and USD/LKR depreciated to Rs.310.80/311.20.

Sri Lanka's rupee weakened to 311.50/312.00 against the US dollar (from 311.00/20 on Friday) and government bond yields opened higher after global oil prices jumped over 20% and rose above $100/barrel.

CFA Society Sri Lanka and Frontier Research will run a half-day "Economics in Practice" executive program on 12 March (08:30–12:30) in Colombo to teach professionals to interpret key economic indicators, fiscal and external trends and their business/investment implications; registration closes 10 March.

Sri Lanka Customs collected 212.4 billion rupees in February 2025, exceeding its 160.2 billion-rupee target by 28% (46.4 billion rupees). Officials attribute the jump to stronger enforcement, improved valuation and a rebound in imports alongside currency movements.

The Central Bank of Sri Lanka purchased USD 461 million from the domestic forex market in February 2026 and did not sell any dollars. Net purchases for Jan–Feb totaled USD 661.3 million, raising official reserves to USD 7.28 billion — the first time above USD 7 billion since August 2020.

Sri Lanka received USD 729 million in worker remittances in February 2026 and USD 1.48 billion in January–February 2026, a 32% year-on-year increase. February was slightly lower than January's USD 751.1 million.

Sri Lanka’s official worker remittances rose 33% to US$729 million in February 2026. Inflows for January–February increased 32% to US$1,480.1 million, with remittances climbing after the central bank wound down the parallel exchange rate regime.

CMTA urges consumers to prefer buying brand-new vehicles from authorised agents, citing transparent pricing, manufacturer warranties and comprehensive after-sales support; it warns the used-car market's price volatility and malpractice (under-invoicing, misdeclaration, VAT-free trade-ins) can expose buyers to legal and financial risk.

Sri Lanka's rupee closed at 311.00/20 to the US dollar, slightly firmer on the day but weaker week-on-week. Government bond yields were broadly steady across maturities, with the 15.12.2026 issue quoted at 8.20/30%.

Sri Lanka's official reserve assets reached USD 7,284 million at end‑February 2026, the first time above USD 7 billion since August 2020. Foreign currency reserves rose to USD 7,057m and gold reserves jumped 83.4% to USD 200m; the total includes proceeds from a swap with the People's Bank of China.

Sri Lanka's rupee weakened to 311.30/60 per US dollar from 310.50/311.10, while government bond yields were broadly steady across the curve (e.g. 01.06.2033 quoted at 10.48/51%). The ASPI fell 0.44% to 22,733.15 and the S&P SL20 rose 0.55% to 6,390.67.

Secondary bond market yields held broadly steady, with major maturities trading between 8.95% (15.01.28) and about 10.795% (15.06.34/35). Net liquidity surplus was Rs. 336.51bn, CB drained Rs. 75bn via overnight repo at 7.57%, and USD/LKR closed at 311.00/311.50.

Sri Lanka's rupee weakened to 310.50/311.10 per US dollar on Thursday from 310.30/60, while government bond yields were broadly steady — 15.12.2026 at 8.20/30% and long-dated bonds roughly 9.22–10.75%.

JAT Holdings PLC completed the second-phase expansion of its binder plant, increasing production capacity by 76% and bringing the facility into full operation. The upgrade is intended to support growth in emulsions and coatings, reduce import reliance, and improve cost predictability and FX exposure.

Sri Lanka's rupee weakened to 310.70/85 per USD from 310.30/60, while government bond yields were broadly steady (around 9.00–10.55% across quoted maturities); the ASPI rose 1.05% to 22,814.22 and the S&P SL20 was up 0.90%.

Net money-market liquidity surplus rose to Rs. 403.77 billion (from Rs. 332.49b) with Rs. 254.06 billion at the Central Bank SDFR and the DOD conducting Rs.75bn overnight and Rs.75bn seven-day repos. T-bill yields held broadly steady (91d 7.63%, 182d 7.92%, 364d 8.23%) and USD/LKR closed at 310.30/310.60.

Saliya Pieris warned Sri Lanka faces economic fallout from the Middle East war, citing rising global oil prices and curtailed gas output, FX volatility, potential drops in European and Middle Eastern tourist arrivals, disruptions to tea exports and risks to remittances, and urged early policy responses.

Senior bankers at the Association of Professional Bankers convention urged caution, prioritising balance-sheet discipline—liquidity, capital buffers, and managing interest-rate and FX exposure—over rapid expansion. Speakers also highlighted selective growth, risk-adjusted returns, and greater use of digital capability and sustainable debt instruments.