Foreign investors sold more than US$14.7 million worth of Sri Lanka government securities in the week ended May 14, Central Bank data show, tipping cumulative foreign positioning in rupee bonds into a net outflow for 2026 for the first time, EconomyNext reported.

Offshore holders booked a net sale of 4,725 million rupees over the week — equivalent to US$14.77 million at Rs. 320 to the dollar. The cumulative position over the first 19 weeks of the year now stands at a net outflow of about Rs. 2,359 million, sharply reversing the net inflow of Rs. 21,863 million recorded in the first six weeks of 2026.

For comparison, foreign investors poured a total of about Rs. 71.5 billion (around US$234.4 million) into rupee bonds during the whole of 2025, when deflationary policy and curtailed imports drew steady inflows despite a depreciating currency.

The exit comes as renewed pressure builds on the rupee. The currency has fallen more than 5 percent so far this year after holding broadly steady for more than three years, and the slide has accelerated this week with People’s Bank’s selling rate hitting Rs. 340 — the highest in the published cycle.

EconomyNext also reported that Wednesday’s quoted telegraphic transfer rate moved further to Rs. 334.50 buying and Rs. 343.50 selling, with no spot quote available for the rupee. Government bond yields were quoted higher and wider across maturities, with the 15 December 2029 bond at 10.20/10.35 percent, up from 10.20/10.30 percent previously.

Analysts cited by EconomyNext said the pressure has intensified since last month’s more than 35 percent hike in fuel prices, which pushed up inflation expectations and complicated the Central Bank’s monetary stance. The Central Bank has kept its key policy rates steady since May 2025, after cutting them by a cumulative 825 basis points over two years from June 2023. Foreign Minister Vijitha Herath told Parliament last week that IMF and ADB inflows are manageable and the depreciation is not unique to Sri Lanka, citing regional comparisons — though the bond outflow data suggest markets are not yet aligned with that framing.

Global investor risk appetite has also weakened on growth concerns linked to the Middle East escalation, EconomyNext said. The CBSL’s last update on current account flagged the post-restructuring inflow surplus has ended, making fresh bond outflows a more pressing signal for sovereign financing.

Source: EconomyNext.