Foreign investors sold around US$14.7 million of Sri Lanka government securities in the week ending June 4, Central Bank data showed, a fourth straight weekly outflow that took the cumulative net selling over the past four weeks to roughly US$65 million.
Foreigners offloaded a net 4,768 million rupees of rupee-denominated paper in the week, EconomyNext reported. The outflows came despite the Monetary Board’s 100 basis point hike in the Overnight Policy Rate to 8.75 percent on May 26, the central bank’s first move on rates in a year. Analysts had expected the rate decision to slow capital outflows.
The rupee weakened further over the week. After hitting a low of 354 against the U.S. dollar on May 21 and recovering to the 334 level, the currency fell back to 342 this week, the data showed, matching the trajectory flagged by SJB economic spokesman Harsha de Silva on Thursday. The rupee has now depreciated 7.8 percent against the dollar in the year through June 5, after holding broadly stable for more than three years following the post-default restructuring.
Through 22 weeks of 2026, the net outflow from rupee bonds stands at around 19 billion rupees, a sharp swing from the 21.9 billion rupee net inflow recorded over the first six weeks of the year. Sri Lanka enjoyed total inflows of about 71.5 billion rupees (US$234.4 million) over 2025, EconomyNext said, with analysts attributing those flows to the Central Bank’s deflationary stance and curtailed imports.
The Central Bank has linked the current pressure to higher oil and vehicle import bills amid the lingering Middle East conflict — drivers that prompted the May 16 Rs.50-per-litre customs surcharge on the vehicle import slab — and to demand-driven inflation following a more than 40 percent rise in fuel prices over the cycle. Globally, EconomyNext said, investors remain cautious about growth in the wake of the latest Middle East escalation.
