📈 Foreign Buying in Sri Lanka Rupee Bonds Continues for Third Straight Week

Central Bank data shows offshore investors bought net Sri Lanka rupee bonds for a 3rd consecutive week despite mild currency pressure. • Inflow Overview • Weekly Net Buy: Rs. 364 Mn (US$ 1.1 Mn) for the week ended Oct 16. • 3-Week Cumulative Inflow: Rs. 5.5 Bn, recovering from a prior 2-week outflow of Rs. 16.5 Bn. • Total Foreign Holdings: Boosted to Rs. 202.4 Bn in government securities. • YTD Inflows: Total net inflows stand at ~Rs. 61.1 Bn this year, compared to Rs. 71.5 Bn total net inflows last year. • Consistency: Foreign investors have been net buyers in 16 of the last 18 weeks. • Market Dynamics & Currency Pressure • Foreign buying slowed slightly from prior weeks amid downward pressure on the local currency. • The Rupee has depreciated 6.4% YTD through Oct 16 due to higher oil/vehicle imports and Middle East conflict risks. • Monetary Policy Context • Central Bank raised key policy rates by 100 bps in May to manage demand-driven inflation following fuel price hikes. • Rate hike followed 24 months of policy easing (825 bps reduction from June 2023 to May 2025).