Sri Lanka's stock exchange indices moved higher on Tuesday as diversified financials led trading, while foreign investors continued purchasing government securities amid currency stabilization and recovering worker remittances.

Sri Lanka's Colombo Stock Exchange indices traded in positive territory on Tuesday morning, with the benchmark All Share Price Index rising 0.16 percent to 21,450.72 points, while the more liquid S&P SL20 index climbed 0.18 percent. Market turnover reached 245.5 million rupees, with the diversified financials sector commanding the largest share at 64.4 million rupees. Key gainers included Hatton National Bank, Richard Pieris and Company, and Citizens Development Business Finance, though Cargills declined notably during the session.

The positive momentum reflects broader economic improvements, particularly in currency stability and foreign exchange reserves. The Central Bank purchased a net US$348.6 million in July and has accumulated US$905 million in net purchases during the first seven months of 2026, strengthening reserves ahead of scheduled debt repayments to sovereign bond holders in April 2028. The rupee quoted stronger at 334.90/335.00 to the dollar on Tuesday, with bond yields declining further, particularly on shorter-tenor securities.

Worker remittances demonstrated significant recovery, rising 11.5 percent to US$777.6 million in July following June's seven-month low. Year-to-date remittances reached US$5,382.4 million, representing 21.4 percent growth. The improvement follows rupee stabilization after May's depreciation, when exchange rate uncertainty had prompted expatriates to resort to informal transfer channels. Analysts project remittances could reach record highs this year, buoyed by increased overseas migration among Sri Lanka's labor force since the country's 2022 economic crisis.

Foreign investor interest in Sri Lankan securities strengthened considerably, with net purchases of 71.7 billion rupees in government rupee bonds over eight consecutive weeks through August 7. The foreign bond holding reached 192.9 billion rupees, the highest level the Central Bank has published, supported by currency stabilization and improved macroeconomic conditions. However, inflation pressures emerged following a 50 percent fuel price increase in recent months, prompting the Central Bank to raise its key policy rate by 100 basis points in May.