Foreign investors sold around US$13.9 million worth of Sri Lanka government securities in the week ended May 21, Central Bank data show, extending an exit from rupee bonds into a second consecutive week amid renewed pressure on the currency, EconomyNext reported.
Offshore holders booked a net sale of 4,580 million rupees over the week, equivalent to US$13.87 million at Rs. 330 to the dollar. The outflow follows the more than US$14.7 million sold in the week to May 14, which had tipped cumulative foreign positioning into a net outflow for 2026 for the first time. The combined two-week exit now exceeds US$28 million.
Over the first 20 weeks of the year, foreign investors have been net sellers of about 6,939 million rupees, a sharp reversal from the net inflow of 21,863 million rupees recorded in the first six weeks of 2026. For the whole of 2025, foreign investors poured a total of around 71.5 billion rupees (about US$234.4 million) into rupee bonds, when deflationary policy and curtailed imports drew steady inflows.
The selling comes as the rupee depreciates more quickly after holding broadly steady for over three years. The currency has fallen more than 7 percent so far this year, reducing the value of rupee bonds for foreign holders on a currency-adjusted basis. Analysts cited by EconomyNext said higher inflation expectations following last month’s more than 35 percent fuel price increase, along with the weaker rupee, have added pressure ahead of the Central Bank’s next move. Global investors are also cautious on growth because of the latest Middle East escalation.
Markets are watching the Monetary Policy Board decision due on Tuesday, May 26 as a potential turning point for sentiment. The Central Bank has held its key policy rates steady since May 2025, after cutting them by a cumulative 825 basis points over 24 months from June 2023. The fresh outflows compound financing concerns flagged in the CBSL’s latest current account update, which warned the post-restructuring inflow surplus has ended.
Source: EconomyNext.
