Foreign investors dump Sri Lanka rupee bonds for second straight week

EconomyNext reports that foreign investors sold a net Rs. 8.605 billion (US$26.1 million) in Sri Lankan rupee bonds during the week ending October 29, according to Central Bank data. The week ending October 30 marked a second consecutive week of net selling, and the latest transactions brought net outflows over four weeks to Rs. 22.4 billion.

EconomyNext says Sri Lanka recorded net foreign selling in four of the past 20 weeks. Despite the recent withdrawals, the report puts net inflows into local-currency bonds at about Rs. 49.7 billion so far this year; it says net inflows totalled Rs. 71.5 billion last year.

EconomyNext reports that analysts linked the sales to downward pressure on the rupee. The report says the currency had remained steady for more than three years before a sharp decline in May, and had fallen 6.8% by October 30. It attributes the Central Bank’s explanation for the decline to increased oil and vehicle imports amid the continuing Middle East conflict, while also noting global investor caution over growth prospects following a further escalation in the region.

EconomyNext says the rupee later stabilized after the Central Bank increased its key policy rate by 100 basis points in May to contain inflationary pressure associated with stronger demand. The report also describes inflation rising over the previous seven months after fuel prices climbed by nearly 50%; the government raised fuel prices in the final week of September after reductions in June and August. It adds that before the May rate increase, the Central Bank had kept rates unchanged since May 2025, following cuts totalling 825 basis points over 24 months from June 2023, a period during which foreign investors had been buying rupee bonds.

Written automatically by AI from the outlets’ own reports, and not reviewed by an editor. It can be wrong — the original report is the authority.