Foreign investors sold a net Rs. 697 million (US$2.25 million) worth of Sri Lanka government securities in the week ended April 10, Central Bank data shows, amid renewed depreciation pressure on the local currency and global caution driven by the Middle East conflict.
Outflow trend
The latest sale marks the 11th week of net foreign outflows in the last 30 weeks. Cumulative foreign investment into rupee bonds in the first 15 weeks of 2026 has fallen sharply to Rs. 1,554 million, down from Rs. 21,863 million recorded in the first six weeks of the year alone.
The decline reflects growing investor caution over economic growth prospects amid the ongoing Middle East war and its impact on global commodity prices and shipping routes.
Historical context
Sri Lanka enjoyed total rupee bond inflows of approximately Rs. 71.5 billion (US$234.4 million) throughout 2025. However, the country experienced a sharp outflow of Rs. 10.1 billion ($32 million) in the two weeks following US President Donald Trump’s tariff declaration in the first week of April last year.
The Central Bank has kept its key policy rates steady since May 2025 after reducing them by 825 basis points over 24 months. Analysts note that Sri Lanka’s deflationary monetary policies have historically helped attract bond inflows despite rupee depreciation, but the current geopolitical environment has dampened appetite for emerging market debt.
