News & market updates

Parliament's Committee on Public Finance warned that transferring debt management from the Central Bank to the Public Debt Management Office has created gaps in public debt and government securities data that could fuel speculation and market distortions; CBSL says PDMO now has publication authority while CBSL continues to provide downloadable time-series.

World Bank cut its global growth forecast to 2.5% for 2026, warned higher energy and fertiliser prices will raise inflation, and is making $50–60bn available immediately (scalable to $80–100bn over 15 months) to support vulnerable countries.

Foreign holdings of Sri Lanka’s rupee‑denominated T‑bills and T‑bonds rose by Rs.13 million to Rs.121.34 billion in the week to 11 June, ending a five‑week outflow streak; holdings are down Rs.19.96 billion year‑to‑date and represent about 0.66% of outstanding govt securities.

Alliance Finance Company PLC withdrew its planned Rs 1.5 billion five-year tier-2 listed debenture issue due to prevailing adverse market conditions; the company said it will consider proceeding when market conditions are more favourable.

Secondary bond market ended the week bullish as yields fell sharply across the curve after improved risk sentiment following reports of a potential US‑Iran peace deal. Weekly T‑bill yields rose (91-day to 10.09%), while Thursday's bond auction raised Rs.92.55bn (61.7% of offer) with mixed maturity outcomes.

Sri Lanka's rupee strengthened to 332.00/334.00 against the US dollar (from 335.50/336.00) and government bond yields fell sharply. Markets rallied after Pakistan announced a US‑Iran deal; selected bond quotes include 15.12.2032 at 11.50/70% (down from 12.25/40%).

Asian share markets surged and Brent crude fell about 4% to $83.80 after a tentative US–Iran deal eased supply concerns, reducing inflationary pressure and lessening the need for tighter policy as central banks meet this week; U.S. yields fell and the dollar weakened.

Sri Lanka's rupee closed at 335.50/336.00 per USD on Friday and government bond yields fell sharply (e.g. 15.02.2028 at 11.25/40%, 01.08.2030 at 11.90/12.05%, 15.12.2032 at 12.25/40%, 15.03.2035 at 12.65/95%). Dealers attributed the move to Donald Trump's announcement.

Sri Lanka sold Rs92.55 billion of 2030 and 2032 government bonds — Rs44.95bn of the 15 May 2030 bond at an average yield of 11.65% and Rs47.59bn of the 15 Dec 2032 bond at 12.69% — while bids for the 2037 issue were not accepted.

Sri Lanka's rupee strengthened to 335.50/336.00 per US$ while government bond yields fell across maturities (e.g. 01.07.2028 quoted at 11.40/70% versus 11.75/85% previously) amid increased secondary-market trading.

World Bank says Middle East conflict will slow global growth to 2.5% in 2026 (the lowest since COVID-19) and is ready to provide up to $100 billion to affected countries over 15 months. It warns higher energy prices (Brent ~ $94/bbl in 2026), rising inflation and borrowing costs, and downside risks that could cut growth to 1.3% if disruptions worsen.

Fitch revised its 2026 global sovereign sector outlook to 'deteriorating' from 'neutral', citing spillovers from the US‑Iran war that will weaken GDP, raise inflation and push up bond yields. Fitch said Greater China is the only region upgraded to 'neutral' due to strong exports and lower energy exposure.

Rs.150 billion Treasury Bond auction delivered mixed results — weighted average yields came in below expectations but the offered amounts were not fully raised and the longest 01.07.37 maturity was rejected. Secondary market yields eased after the auction, net liquidity surplus was Rs.66.62bn, overnight call/repo ~9.2%, and USD/LKR closed at 335.00/337.50.

Sri Lanka sold Rs3,510 million of on-tap Treasury bills at average yields of 10.09% (3-month) and 10.27% (6-month), bringing total bills sold this week to Rs75,254 million; settlement is June 12.

Sri Lanka rupee closed at 336.00/337.00 to the US dollar on Thursday, weaker versus 332.25/75 the previous day, while bond yields were broadly steady with the 01.07.2028 at 11.75/85% and nearby maturities around 12%. TT rate quoted 328.00 buying, 337.00 selling.

The Central Bank of Sri Lanka briefed Parliament on current monetary policy, exchange-rate behaviour and the country's economic situation. Governor Nandalal Weerasinghe and senior CBSL officials answered MPs' questions and provided clarifications.

Sri Lanka's rupee was quoted at 333.00/335.00 to the US dollar on Thursday, slightly weaker than 332.25/332.75 the previous day, while the secondary bond market was quiet ahead of a 150,000 million rupee Treasury bond auction; onshore yields were around 11.85–12.30%.

T-Bill yields rose for the fourth consecutive week—91-day 10.09%, 182-day 10.27% and 364-day 10.16%, the highest since late Sept 2024. The rupee appreciated after CBSL cut exporters' FX conversion time to 30 days; the auction accepted Rs.71.744b of Rs.140b (51.25%) ahead of a Rs.150b bond auction.

Central Bank Governor Dr. Nandalal Weerasinghe briefed Parliament on the current monetary policy stance and exchange rate developments. CBSL officials answered MPs' questions to clarify policy settings and support understanding of macroeconomic stability amid the ongoing economic recovery.

The Public Debt Management Office raised Rs.71,744 million in the T‑bill auction, accepting 51.2% of bids against a Rs.140,000 million target; yields rose to 10.09% (91-day), 10.27% (182-day) and 10.16% (364-day).

Sri Lanka Treasury bill yields rose across maturities at Wednesday’s auction while demand was weak: 71.74 billion rupees sold of 140 billion offered. The 3-month yield rose 25bp to 10.09%, the 6-month up 26bp to 10.27% and the 12-month up 14bp to 10.16%.

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%.

Opposition Leader Sajith Premadasa called on the Government to table in Parliament the Treasury's report on a $2.5 million cyber fraud involving external debt payments. He also warned that conflicting statements from the Government and the Central Bank are creating policy uncertainty and urged a clear fiscal and monetary framework and disclosure of IMF/World Bank/ADB commitments.

Asian stocks slid as Middle East tensions escalated and oil rose (Brent +0.9% to $92.29/bbl), amplifying inflation concerns and the prospect of further interest-rate moves. Investors are focused on upcoming U.S. CPI data and central bank responses.

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.

Asian equities were mixed with tech stocks leading gains as oil prices eased—Brent fell to $93.84/barrel—after a prior surge linked to fighting in the Middle East; higher oil-driven inflation and rising yields are weighing on markets.

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.