News & market updates

Sri Lanka's rupee closed at 310.30/60 to the US dollar on Wednesday, slightly weaker than 310.10/30 on Tuesday; short‑term government bond yields edged up while the rest of the yield curve remained broadly steady.

Sri Lanka’s rupee weakened to 310.20/50 per USD while bond yields were broadly steady, with 2029–2034 maturities quoted slightly higher. A LKR 120,000 million Treasury bill auction was ongoing and the ASPI rose 1.62% to 22,806.01.

Analysts warn the war in Iran could push Brent crude above $100 — Brent was near $83.36, touching $85.12 — and that a sustained oil shock would widen current account deficits, raise inflation and trigger currency falls and capital outflows in emerging markets. Low-reserve countries such as Sri Lanka, Pakistan, Argentina and Turkey face heightened risks.

Former Central Bank deputy governor W A Wijewardene recommends Sri Lanka adopt a 2% inflation target with a 1 percentage point leeway (2–3%) to encourage long-term saving and investment, lower interest rates and help stabilise the exchange rate.

Secondary bond yields spiked sharply in early trade on escalating Middle East tensions but rebounded after renewed buying, with two-way quotes closing higher and healthy volumes. The rupee traded between Rs.309.70 and Rs.310.40 intraday before settling at a weaker close.

First Capital Research says March 2026 Iran conflict risks could push Brent to $95–110/bbl and raise Sri Lanka's inflation, external deficits and market volatility, complicating monetary policy. It notes shipping diversions may boost Colombo's transshipment role and that equity corrections could offer selective entry points.

Secondary Treasury bond yields swung intra-day and closed higher (key maturities trading ~8.30%–10.74%); the weekly T-Bill auction offers Rs.120 billion vs. Rs.125.95 billion maturing, and the rupee weakened to Rs.310.10/310.30.

Rupee closed at 310.10/30 per USD on Monday, weaker than Friday's 309.20/25, while government bond yields rose across maturities (e.g. 15.12.2026: 8.20-8.35%; 01.06.2033: 10.45-10.50%).

Sri Lanka's external current account recorded a $369.7m surplus in January 2026, up 271% YoY, driven by 9.1% export growth, strong remittances and a narrower trade deficit. Gross official reserves were $6.8bn, foreign inflows into gov't securities were $16.6m while CSE saw a $21.9m net outflow; the LKR was 0.2% stronger YTD to end-February.

The Central Bank of Sri Lanka will issue a review report tomorrow assessing the potential impact of the ongoing Middle East crisis on Sri Lanka’s economy, the president told Parliament; the evaluation aims to clarify possible effects on the country’s financial sector.

Bond yields fell across the curve after the PDMO raised the full Rs.140bn in Thursday’s Treasury Bond auction (bid-to-cover 2.79x), with T-Bill weighted averages declining and secondary yields closing lower week-on-week. February CCPI eased to 1.60% y/y, system liquidity rose to Rs.358.76bn and USD/LKR closed near Rs.309.31.

Rupee opened weaker at 309.75/310.20 to the USD, down from 309.20/25 on Friday; government bond yields rose across maturities (e.g. 15.12.2028 at 9.15–9.20%, 01.06.2033 at 10.45–10.55%) before renewed buying prompted a partial recovery.

CFA Society Sri Lanka and Frontier Research will run a half-day "Economics in Practice" executive programme on 12 March 2026 in Colombo to help professionals interpret economic indicators and fiscal/external trends (trade balances, capital flows, reserves) for business and investment decisions.

A US-Israel strike on Iran and ensuing Strait of Hormuz disruption sent Brent crude up over 7% (above US$90) and led the Ceylon Petroleum Corporation to raise diesel prices (Auto +Rs4, Super +Rs6), threatening Sri Lanka's fuel supplies, tea exports and imports of construction materials.

Digital Economy Ministry Secretary Waruna Sri Dhanapala said Sri Lanka is in the final stage of enabling inward remittances via PayPal with collaboration from private banks and the Central Bank. Once live, SMEs and freelancers can receive foreign income through a regulated channel, supporting FX inflows and tax compliance.

The Central Bank of Sri Lanka released key findings of the Systemic Risk Survey for H1 2026 on market participants' perceptions of risks to the financial system; the survey was conducted 19 Dec 2025–16 Jan 2026 in the aftermath of the Ditwah cyclone. Respondents included executives from banks, finance companies, insurance firms, brokers and other financial service providers.

Public Debt Management Office raised the full Rs. 140 billion offered across three tenors at weighted average yields of 9.50% (01.03.30), 10.70% (15.06.34) and 10.88% (01.07.37), below or in line with market expectations. Secondary bond market rallied, liquidity was elevated at Rs. 341.02 billion and USD/LKR closed ~309.29/309.32.

Net liquidity surplus rose to Rs. 322.93 billion (highest in 22 years) as the CB drained liquidity via repos; weekly T‑Bill yields fell for a sixth straight week and a Rs. 140 billion Treasury Bond auction across three maturities is scheduled (settlement 3 Mar 2026).

DFCC Bank reported record results for the year ended 31 Dec 2025: Group core business PAT of LKR 11.2 Bn and Bank PAT of LKR 16.03 Bn including a disposal gain. Total assets rose 22% to LKR 857 Bn and the loan book grew to LKR 516 Bn.

Economist Talal Rafi urged a disciplined shift from stabilisation to growth, calling for trade and productivity-driven reforms alongside fiscal discipline and reserve accumulation. He noted debt-to-GDP has fallen to near 100%, IMF growth at ~2.9% (this year)/3.1% (next) and reserves projected to rise to ~$8.8bn by year-end.

Secondary bond market rates edged up as participants awaited a Rs.90 billion Treasury Bill auction and a Rs.140 billion Treasury Bond auction this week. Selected government bond yields rose across tenors, money-market liquidity showed a surplus of Rs.297.94 billion, and USD/LKR was around 309.35/309.40.

Overseas Realty (Ceylon) PLC reported Group Profit Before Tax of Rs. 9,266 million for the year ended 31 Dec 2025, with Group revenue of Rs. 11,944 million, a 49% increase year-on-year. Growth was driven by higher apartment sales, increased rental income and a Rs. 3,223 million fair value gain on investment properties, while LKR depreciation caused a Rs. 511 million net exchange loss.

Commercial Bank of Ceylon's Chief Risk Officer Kapila Hettihamu says the bank maintains a disciplined, conservative risk management approach that has supported resilience, improved asset quality and strong portfolio growth. He cites use of analytics, stress testing and governance to manage credit, tech and ESG risks.

Secondary bond market opened with rates edging up and trading dull ahead of T-bill/Bond auctions and February CCPI; selected tenors traded between 9.00% (15.02.28) and 10.84% (15.06.35). Net liquidity surplus was Rs.288.48bn; CB drained Rs.50bn via overnight repo at 7.62%; USD/LKR ~309.36.

Prime and Melwa acquired a four-acre marina-front land parcel in Port City Colombo for $57.6m to build an ultra-luxury apartment development with estimated total turnover of about $250m. The USD-denominated project will be developed by joint venture Prime Melwa Port City Ltd. and is expected to finish within four years.

Prime Group and Melwa Conglomerate acquired a four-acre marina-front parcel in Port City Colombo for USD 57.6 million to develop an ultra-luxury apartment project with estimated turnover of about USD 250 million, slated for completion within four years.

Secondary bond-market yields edged higher last week, driven by profit-taking, with medium–long tenors rising (e.g. 01.10.32 to 10.25%, long end up to 10.92%). The weekly T-bill auction was fully subscribed raising Rs.66.00bn while the 91-day yield fell to 7.66%; USD/LKR closed ~309.40.

Sampath Group posted record 2025 results with group PBT of Rs. 53.0bn, PAT of Rs. 32.6bn and total assets surpassing Rs. 2.0tn. Sampath Bank reported PBT of Rs. 49.3bn, PAT of Rs. 30.2bn, declared a Rs. 10.30 per share final dividend and saw gross loans rise 27% to Rs. 1.2tn.

Sampath Bank reported record bank-level PBT of Rs 49.3 Bn and PAT of Rs 30.2 Bn for the year ended 31 Dec 2025, with gross loans up 27% to Rs 1.2 Tn and a first and final cash dividend of Rs 10.30 per share. NII and NIM declined amid lower rates, while Tier 1 and total CAR were 14.75% and 17.65%.