ECONOMYNEXT – Foreign holdings in Sri Lanka rupee bonds hit a fresh near three-year high in the week ended on July 16 as offshore investors bought a net US$ 23.2 million worth of government securities, Central Bank data showed, amid a stable rupee currency. Foreigners bought a n…

ECONOMYNEXT – Foreign holdings in Sri Lanka rupee bonds hit a fresh near three-year high in the week ended on July 16 as offshore investors bought a net US$ 23.2 million worth of government securities, Central Bank data showed, amid a stable rupee currency.

Foreigners bought a net 7,666 million rupees (US$23.2 million at 1$=330 rupees) in the week, which boosted foreign holdings in rupee bonds to 176,561 million rupees, the highest since July 27, 2023, the Central Bank data showed.

The latest inflow boosted foreign investment in rupee bonds so far this year to US$106.6 million. The island nation witnessed a net inflow of over Rs.55.2 billion rupees (US$167.2 million) in the last four weeks after the rupee started to stabilize. The rupee currency’s selling rate fell to as low as 354 against the U.S. dollar on May 21 before recovering and gaining to the 340 level. The rupee had been steady for more than three years before the latest depreciation with the Central Bank citing higher oil and vehicle imports amid a lingering conflict in the Middle East. The rupee has fallen 7.8 percent through July 16 this year. Globally, investors are cautious about economic growth due to the impact of the latest Middle East escalation. The island nation enjoyed a total inflow of around 71.5 billion rupees (around US$234.4 million) into rupee bonds last year.

Analysts said Sri Lanka’s deflationary policies in the past helped inflows amid curtailed imports. However, the island nation has seen an uptick in inflation in the last three months after nearly 50 percent hike in fuel prices gradually.

The government reduced the fuel price in the last week of June. The Central Bank raised its key monetary policy rate by 100 basis points in May to curb inflationary pressure stemming from higher demand.

Before the May rate hike, the Central Bank kept its key policy rates steady since May 2025 after reducing them by 825 basis points over 24 months since June 2023 and foreign investors have been buying rupee bonds despite slight depreciation in the local currency. (Colombo/July 19/2026)