Foreign investors purchased nearly USD 30 million worth of Sri Lankan government securities in the week ending February 12, continuing a trend that has seen offshore buying reach USD 75.7 million over three consecutive weeks, according to data from the Central Bank.
This robust offshore investment has propelled foreign holdings in local rupee bonds to a more than 29-month high. During the week, foreigners acquired a net 9,209 million rupees (approximately USD 29.9 million at an exchange rate of 1 USD = 308 rupees). This marks the 17th week of net foreign purchases of rupee bonds out of the last 24 weeks.
Over the past three weeks, foreign investors have purchased a net total of 23,304 million rupees (USD 76.7 million) worth of bonds. This recent activity has contributed to a net foreign inflow of 21,863 million rupees (USD 71 million) in the first six weeks of this year, as evidenced by the data.
The influx of foreign investment has elevated foreign holdings in rupee bonds to their highest level since September 7, 2023. Globally, investors have exhibited caution due to potential interest rate cuts by the U.S. Federal Reserve. Such rate cuts could trigger a capital shift from the U.S. to riskier or alternative assets, including those in emerging markets and metals, which may benefit countries like Sri Lanka.
The island nation experienced a total inflow of approximately 71.5 billion rupees (around USD 234.4 million) into rupee bonds in 2025. However, Sri Lanka also faced an outflow of 10.1 billion rupees (USD 32 million) in the two weeks following Donald Trump’s tariff announcement in the first week of April last year, leading to a depreciation of the rupee.
Analysts have noted that Sri Lanka’s deflationary policies, which include curtailed imports, have contributed to these inflows. The Central Bank of Sri Lanka has maintained its key policy rates since May of the previous year, following a reduction of 825 basis points over 24 months. Despite the depreciation of the local currency, foreign investors have continued to invest in rupee bonds.
(Colombo/February 15/2026)
