📈 Foreign Investor Confidence Surges: Rupee Treasuries Hit 2-Year High!

• Foreign holdings in Rupee Government Securities recorded a massive net inflow of Rs. 10.36 Bn for the week ending Oct 31, marking the largest weekly inflow in 32 weeks. • Total foreign holdings now stand at Rs. 141.32 Bn, the highest level in two years (since Mid-Nov 2023). This represents a 259% increase from the low recorded in Sep 2024. • The Secondary Bond Market saw a pronounced shift to bullish sentiment and robust activity, leading to a week-on-week downward movement in the yield curve. • Key drivers: The US Fed's monetary policy easing and Sri Lanka's strong fiscal performance. • Fiscal Review (Jan-Sep 2025) highlights: Budget deficit narrowed by 54.5% and a robust Primary Surplus of Rs. 1.46 Tn (well above IMF targets). • Inflation (CCPI Oct YoY) accelerated to +2.1% (from +1.5% in Sept) but remains moderate and below the CBSL's medium-term target range. • Money market liquidity surplus increased 20.10% to Rs. 155.05 Bn. • The LKR depreciated marginally, with the USD/LKR spot closing the week at Rs. 304.35/304.45 (vs. 303.70/303.85 prior week).