News & market updates

Authorities uncovered about $85m of suspected foreign-exchange fraud routed overseas via thousands of TT transactions through shell companies, involving roughly 105 local firms and transfers through 13 banks. Government plans tighter oversight, mandatory Customs registration/TINs and to reclassify FX breaches under AML laws; probes continue.

Health Minister Dr. Nalinda Jayatissa said authorities are reviewing requests to raise medicine prices amid rising import and production costs and exchange-rate movements. The Sri Lanka Chamber of the Pharmaceutical Industry warned supply-chain pressures, higher freight and fuel charges and rupee depreciation risk medicine shortages.

Sri Lanka rupee closed at 332.25/75 to the US dollar on Wednesday, firmer than 337.00/75 the previous day; bond yields were broadly steady, with the 01.08.2030 bond around 12.25/40% and the 15.03.2035 at 13.00/20%.

Sri Lanka Customs collected 217.9 billion rupees in May, 16% above the 187.8 billion target. Customs collections for the first five months reached 1,143.7 billion rupees, 44% higher year‑on‑year, driven by stronger enforcement, improved valuation and a rebound in import volumes.

The Central Bank of Sri Lanka now requires exporters to convert any residual foreign-currency export proceeds into rupees by the 10th day of the month following receipt under amended Repatriation of Export Proceeds rules. The change replaces the 90-day window and is intended to support FX liquidity amid recent rupee pressure.

CBSL cut the foreign-currency conversion window for merchandise exporters from three months to one, prompting a stronger rupee (USD buying rate fell from Rs.332.38 to Rs.324.66; selling from Rs.342.08 to Rs.335.39).

Cabinet approved gazetting new Foreign Exchange regulations — Investments Abroad by Residents (No.1 of 2026) and Transfer of Funds Abroad by Emigrants (No.2 of 2026) — and a new Section 22 Order, replacing the 2021 rules governing overseas investments and emigrant remittances. The Central Bank recommended the changes, which aim to streamline the framework while retaining current restrictions.

Secondary bond-market rates edged up with selected Treasury maturities trading between 11.00% and 12.30%, and a Rs. 140 billion T‑Bill auction scheduled for June 10 (Rs.65b 91-day, Rs.55b 182-day, Rs.20b 364-day). Money-market call and repo rates remained above 9%, and USD/LKR closed near Rs.337/337.75.

Sri Lanka's central bank cut exporters' dollar conversion extension to 30 days and the rupee strengthened to about 332/334 (intraday low 328.00 from 336.50). Short-term government bond yields traded lower, with a 15.12.2029 bond at 11.95/12.15% and a 01.08.2030 quote at 12.20/30%.

Sri Lanka's central bank cut the mandatory conversion period for exporters' foreign-currency receipts from 90 days to 30 days, requiring conversion by the 10th of the following month. The rule is intended to generate predictable monthly dollar inflows to banks to ease FX shortages and help stabilise the rupee, while tightening exporters' working-capital flexibility.

Sri Lanka's Central Bank ordered exporters to convert export dollar proceeds within one month (down from three) effective immediately to curb rupee depreciation. The move follows a $211m defence of the currency in May and a 100bp overnight policy rate hike on May 26.

CBSL's new 'Repatriation of Export Proceeds into Sri Lanka Rules No.2 of 2026' requires exporters to convert all residual foreign exchange proceeds on or before the 10th day of the month following receipt, shortening the previous three-month window; the rule takes effect after Parliamentary approval and preserves limited authorized uses and a 10% cap for investment in government FX debt.

Sri Lanka's rupee closed at 337.00/75 per US dollar, slightly weaker than 337.00/30 the previous day, while local bond yields rose (notably the 2030 and 2035 maturities). An auction of 140 million rupees in treasury bills is scheduled for Wednesday.

The IMF approved Sri Lanka’s combined Fifth and Sixth Reviews on 28 May 2026, releasing SDR 508 million (~US$695m) and bringing total EFF disbursements to SDR 1.778 billion (~US$2.4bn). The Fund said stabilisation has improved revenues, growth and reserves but warned debt sustainability remains “very high” and key structural reforms (electricity, public financial management) are unfinished.

Rupee weakened to 338.00/10 per USD from 337.00/30 while bond yields were broadly steady and a 140,000 million rupee T-bill auction is scheduled for Wednesday. A 01.08.2030 bond was quoted at 12.10/20% (down from 12.15/20%) and a 15.06.2034 bond at 13.00/15% (up from 12.75/13.00%).

Wealth Trust/Finance Ministry reported a steady secondary bond market and announced a Rs.150 billion Treasury Bond auction for 11 June (settlement 15 Jun 2026): Rs70b 15-May-2030 (coupon 11.00%), Rs60b 15-Dec-2032 (11.50%), Rs20b 1-Jul-2037 (10.75%). Secondary yields were broadly steady (e.g. 15.09.27 at 11.00%) and USD/LKR spot closed at Rs.337.00/337.35.

Sri Lanka Customs says vehicle imports remained resilient despite a 50% surcharge introduced in May, with vehicle duties contributing about 30% of Customs revenue (e.g. Rs.76bn of Rs.212bn as of 28 May). The CBSL was a net seller of $211.3m in May as the rupee weakened, underlining FX pressure and potential interest-rate implications.

Sri Lanka's rupee closed at 337.00/30 to the US dollar on Monday, from 335.50/336.25 the previous day. Bond yields were mostly steady: the 01.08.2030 bond rose to 12.15/20%, the 15.01.2033 was unchanged at 12.30/65%, and the 15.03.2035 edged up to 12.80/13.10%.

ASPI fell 1.57% (340.85 pts) to 21,403.28 as investors sold off amid escalating Middle East tensions and regional market weakness; turnover was Rs. 2.61bn with a net foreign outflow of Rs. 54.12m and oil prices up ~3% which lifted the US dollar.

New active credit cards in Sri Lanka rose by 12,999 in April, down from 22,473 in March, taking total active cards to 2,228,852 by end-April. Analysts say growth was driven by economic recovery and falling rates but may slow after the Central Bank's 100bp May rate hike and amid fuel rationing.

IMF cut Sri Lanka's 2026 growth forecast to 3% and approved temporary fiscal easing under the EFF, enabling an immediate SDR 508m (~$695m) disbursement. It also lowered end‑2026 reserve projections to $8.645bn and trimmed 2026 tourism earnings to $2.5bn.

Sri Lanka's workers' remittances rose 36.2% YoY to $847m in May, and pushed January–May inflows above $3.9bn, bolstering foreign exchange reserves and macro stability. May marked the fifth consecutive month of strong growth and was second only to the Dec 2025 record.

Secondary bond market ended the week bearish as yields rose across the curve (trades ranged about 11.95%–13.30%) and foreign holdings fell by Rs.4.77bn to Rs.121.33bn. Pressure came from a 100bp policy rate hike, rising T‑bill yields, tighter liquidity and FX weakness (USD/LKR ~335.75/336.25).

The Central Bank of Sri Lanka said the financial system remained resilient in Q1 2026 despite rising risks, with banking credit up 24.4% YoY and Stage 3 loans down to 9.4%. It imposed a 70% LTV cap on gold loans and cut vehicle LTVs by 10pp from 25 May, noted $103.4m foreign outflows and a 100bp policy-rate hike driving higher yields.

Sri Lanka rupee quoted at 336.25/35 to the US dollar on Monday (was 335.50/336.25), while bond yields were largely steady—01.08.2030 at 12.10/40% and 15.03.2035 at 12.95/13.05%—and the All Share Price Index fell 0.38%.

Sri Lanka's worker remittances rose 32% to US$847 million in May 2026. Remittances were US$3,909.7m in the first five months (up 26% y/y), driven by Middle East tensions, rupee depreciation and a shift from informal to formal banking channels after central bank policy changes.

Foreign investors sold about US$14.7mn of Sri Lanka government securities in the week to June 4 despite a 100bp hike in the Central Bank's Overnight Policy Rate. The rupee has fallen ~7.8% YTD through June 5 and four-week net outflows total around US$65mn amid higher fuel imports and Middle East risks.

Sri Lanka's Central Bank sold a net US$211.3mn in May (bought US$12mn, sold US$223.3mn) as the rupee came under heavy downward pressure and touched a four-year low. Gross official reserves nonetheless rose 1.7% to US$6,873mn by end-May amid higher fuel import bills and dollar demand.

Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando said recent rupee depreciation — from about Rs.331.50/332.50 on Monday to Rs.336.00/338.00 on Friday — was driven by market forces, higher global fuel prices and FX demand, and denied it signals a broader economic crisis.

LAUGFS Gas PLC said domestic LPG prices will remain unchanged for June, keeping the Colombo District 12.5 kg cylinder at Rs. 6,245 as it absorbs higher global procurement, freight and rupee-depreciation costs. Litro Gas Lanka also held May prices for June, keeping its 12.5 kg cylinder at Rs. 4,765.