Foreign holdings in Sri Lanka’s rupee bonds have climbed to a near three-year high, after offshore investors bought a net US$97.1 million of government securities in the week ended 9 July, Central Bank data showed. The buying came as the rupee recovered from the near four-year low it touched in May.
Foreigners purchased a net 32,036 million rupees (US$97.1 million at 330 to the dollar) over the week, lifting total foreign holdings in rupee bonds to 168,895 million rupees — the highest level since 10 August 2023. The inflow flipped foreign investment in rupee bonds for the year to date into a net inflow of US$83.4 million, reversing a net outflow of US$13.5 million recorded just a week earlier.
The turnaround tracks a recovering currency. The rupee’s selling rate had weakened to as low as 354 against the US dollar on 21 May before strengthening back to around the 330 level. The currency had been broadly stable for more than three years before this year’s slide, which the Central Bank has attributed to higher oil and vehicle imports amid the lingering conflict in the Middle East. The rupee has fallen 7.9 percent through 9 July.
Over the past three weeks, since the rupee began to stabilise, the country has seen a net inflow of more than 47.5 billion rupees (US$144.1 million) into rupee bonds. For comparison, total inflows across the whole of last year were around 71.5 billion rupees (US$234.4 million).
The renewed appetite for rupee debt follows an uptick in inflation over the past three months, driven by a near 50 percent rise in fuel prices that the government partly rolled back in the last week of June. The Central Bank has also raised its key policy rate. The bond inflows offer a modest counterpoint to the wider external picture, in which tourism earnings and official reserves both slipped over the first half of 2026.
