Foreign investors continued their interest in Sri Lankan government securities for the fourth consecutive week, as of the week ending February 19. According to data from the Central Bank, bonds held by offshore investors have reached a 29-month high.
During this period, foreigners purchased a net 12 rupees (equivalent to approximately US$38,961 at the exchange rate of 1 USD = 308 rupees). This marks the 18th week within the last 25 weeks that foreign investors have acquired rupee bonds. Over the past four weeks, they have purchased a net total of 23,316 million rupees (approximately US$76.7 million) in bonds.
This recent wave of foreign investment has resulted in a net foreign inflow of 21,875 million rupees (around US$71 million) during the first seven weeks of the year. Consequently, the foreign holdings in rupee bonds have reached a new high not seen since September 7, 2023.
Globally, investors have been exercising caution amid potential interest rate cuts by the U.S. Federal Reserve. When the Fed reduces rates, it often prompts a shift of capital away from the U.S. towards riskier or alternative assets, such as those in emerging markets and metals, which could benefit economies like Sri Lanka.
In 2025, Sri Lanka experienced a total inflow of approximately 71.5 billion rupees (around US$234.4 million) into rupee bonds. However, the country faced an outflow of 10.1 billion rupees (US$32 million) in the two weeks following Donald Trump’s tariff announcement in early April of the previous year, which contributed to a depreciation of the rupee.
Analysts have noted that Sri Lanka’s deflationary policies, coupled with restrained imports, have facilitated these inflows. The Central Bank of Sri Lanka has maintained its key policy rates since May of last year, following a reduction of 800 basis points over 24 months. Despite the depreciation of the local currency, foreign investors have continued to purchase rupee bonds. (Colombo/February 15/2026)
