Foreigners Back Treasuries, Exit CSE as Rupee Slips 6.3% YTD 📈

• Government Securities & CSE: August saw a net foreign inflow of US$ 70.2 Mn into Government securities, bringing Jan–Aug total inflows to US$ 208 Mn. Conversely, the Colombo Stock Exchange (CSE) recorded net foreign outflows of US$ 58.1 Mn in Aug, with Jan–Aug outflows hitting US$ 166 Mn (exceeding 2025’s total outflow of US$ 122 Mn). Total net portfolio flows stood at ~US$ 42 Mn. • Foreign Direct Investment (FDI): H1 2026 FDI reached US$ 405 Mn, following a peak of US$ 1.04 Bn in 2025. • Currency Movement: The Sri Lankan Rupee (LKR) depreciated 6.3% YTD against the USD (Rs. 330.83 per USD as of Sept 30). It also weakened against the CNY (-10.1%), AUD (-9.9%), JPY (-6.3%), GBP (-4.6%), and EUR (-3%), while appreciating slightly📈 Foreigners Back Treasuries, Exit CSE as Rupee Slips 6.3% YTD • Government Securities & CSE: • Government securities saw a net foreign inflow of US$ 70.2 Mn in August, bringing the Jan-Aug total to US$ 208 Mn (vs. US$ 248 Mn in 2025). • The Colombo Stock Exchange (CSE) recorded a net foreign outflow of US$ 58.1 Mn in August. Total Jan-Aug outflows reached US$ 166 Mn, exceeding the full-year 2025 outflow of US$ 122 Mn. • Combined net portfolio flows (Treasuries & equities) stood at ~US$ 42 Mn for Jan-Aug. • Foreign Direct Investment (FDI): • FDI reached US$ 405 Mn in 1H 2026 (following US$ 1.04 Bn in 2025). • Currency Performance: • The Rupee depreciated 6.3% YTD to Rs. 330.83 per USD as of Sept 30. • Weakened against major currencies: Chinese Yuan (-10.1%), Australian Dollar (-9.9%), Japanese Yen (-6.3%), Pound Sterling (-4.6%), and Euro (-3.0%). Appreciated slightly against the Indian Rupee (+0.2%). • Trade & External Sector: • Current Account: Shifted to a deficit of US$ 290.6 Mn for Jan-Aug (vs. a US$ 2.05 Bn surplus a year earlier). • Merchandise Trade Deficit: Widened to US$ 7.18 Bn as imports rose 24.1% to US$ 16.56 Bn (fueled by a 61.6% spike in fuel imports to US$ 4.07 Bn), while exports grew 3.3% to US$ 9.38 Bn. • Remittances & Reserves: Workers' remittances rose 19.8% to US$ 6.13 Bn. Gross official reserves stood at US$ 6.9 Bn at end-August (covering 3.3 months of imports).