Foreign investors purchased approximately 2.4 million US dollars’ worth of Sri Lankan government securities in the week ending December 18, according to data from the Central Bank. This marks a reversal from the previous week, when foreign investors were net sellers. It also represents the twelfth week of foreign purchases out of the last sixteen, bringing foreign holdings in government securities close to a two-year high.

In the most recent week, foreigners bought 747 million rupees (USD 2.44 million at an exchange rate of 305 rupees per US dollar) after having sold securities valued at 1,222 million rupees the week before. The renewed buying interest comes despite a gradual depreciation of the rupee in recent weeks, attributed to higher imports driven by strong private credit growth and Central Bank interventions to purchase dollars and bolster foreign exchange reserves.

Over the last sixteen weeks, Sri Lanka has recorded net foreign inflows totaling 35.4 billion rupees (USD 116.1 million) into government securities. However, immediately following the announcement of U.S. tariffs by former President Donald Trump in early April, the country experienced outflows amounting to 10.1 billion rupees (USD 32 million), with the rupee experiencing a modest decline since that period.

Since December 26 of the previous year through December 18, Sri Lanka has seen total inflows of approximately 72.1 billion rupees (about USD 238 million) into rupee-denominated bonds, according to Central Bank data. Analysts note that the country’s deflationary policies, including measures to curtail imports, have played a significant role in attracting these inflows.

Despite these recent gains, Sri Lanka faced foreign outflows of 48.2 billion rupees from government securities in 2024. Notably, 66 percent—or 78.1 billion rupees—of outflows occurred during the first nine months of the previous year.

(Colombo/December 23/2025)