[REVISION HISTORY]

Sri Lanka financial market developments

5 recorded revisions of this situation.

What changed

2026-09-21 16:55 UTC → 2026-10-05 06:07 UTC · added ~~removed~~

By mid-September 2026, Sri Lanka’s financial markets were characterized by a depreciating rupee and shifting trends in foreign investment. The Sri Lankan rupee continued a gradual decline against the US dollar, with exchange rates moving toward the 331–336 range. Commercial banks reported varying rates, including a selling rate of Rs. 336.75 at Seylan Bank. This currency movement coincided with rising secondary bond yields, which increased by 50 to 70 basis points week-on-week. Simultaneously, banking system liquidity contracted, falling to LKR 317.84 billion from LKR 336.44 billion. Foreign investor behavior showed conflicting patterns during the week ending September 18. While one report noted a 1.31% week-on-week increase in foreign holdings of local government securities to LKR 213.4 billion, other data indicated a significant shift. Offshore investors reportedly net sold rupee bonds worth approximately LKR 7,302 million (US$22.5 million), marking the first divestment in 14 weeks following a 13-week streak of purchases. This outflow was attributed to rupee depreciation driven by increased imports and geopolitical tensions in the Middle East. During this period, the rupee closed at approximately LKR 332.13 against the US dollar. By early October, markets showed signs of stabilization. The rupee remained steady against the US dollar, trading at 330.55/65 in the spot market, though it had depreciated by 6.3 percent against the US dollar over the year through the end of September. In the government securities market, short-term bill yields edged lower, with 91-day and 364-day bills yielding 9.20% and 9.90% respectively. Mid-term yields saw modest increases of 5 basis points for two-year and three-year maturities. A recent Treasury bill auction saw strong demand, with bids reaching LKR 201.2 billion for the LKR 80 billion offered.

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