Sunday Feb 22, 2026
Sunday Feb 22, 2026
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Foreign holdings of T-Bills up 109% YoY and 15% YTD
Foreign investors have begun rebuilding exposure to Sri Lanka’s Government securities market in a decisive manner, with holdings of rupee-denominated Treasuries rising 109.3% year-on-year (YoY) and 15.47% year-to-date (YTD) to exceed Rs. 160 billion, reaching a near 30-month high.
The renewed offshore appetite comes amid improving macro sentiment and relative yield attraction, with foreign participants pointing to fresh portfolio allocations at the start of 2026 as global funds reassessed Sri Lanka’s risk-return profile, Wealth Trust Securities said.
On Monday, Wealth Trust said foreign holdings had crossed Rs. 160 billion, while money market liquidity remained heavily in surplus at Rs. 299 billion, the highest level in over 11 years. At the same time, Treasury Bill rates declined for a fourth consecutive week at its weekly auction, and secondary market Bond yields continued to trend lower.
The simultaneous rise in foreign participation and liquidity reflects underlying monetary mechanics. When foreign investors bring in dollars to purchase Government securities, the Central Bank of Sri Lanka’s absorption of foreign exchange, in order to build foreign reserves, injects rupee liquidity into the banking system. That dynamic has supported elevated surplus liquidity conditions.
In addition, the recent $ 206 million disbursement under the International Monetary Fund’s (IMF) Rapid Financing Instrument post-Ditwah has strengthened gross official reserves. While IMF inflows might initially add to reserves rather than liquidity, their conversion into rupees for Government expenditure can contribute to system liquidity once drawn down.
Wealth Trust said foreign interest has largely concentrated in medium-duration Treasury Bonds, taking advantage of still-elevated nominal yields in a stabilising macro environment. Despite the surge, foreign holdings remain below pre-crisis peaks, suggesting room for further recovery if stability holds.
For now, elevated yields, rising offshore exposure, and sustained surplus liquidity together point to improving confidence in Sri Lanka’s policy and macro trajectory, with portfolio flows becoming an early indicator of that shift.
