Monday Oct 05, 2026
Monday Oct 05, 2026
Monday, 5 October 2026 05:48 - - {{hitsCtrl.values.hits}}
Foreign investors added to their holdings of Government securities in August while continuing to pull money out of the Colombo Stock Exchange (CSE), the Central Bank of Sri Lanka’s (CBSL) External Sector Bulletin for August 2026 showed. Over the same period, the rupee’s depreciation against the US dollar reached 6.3% for the year by end-September.
Foreign investment in the Government securities market recorded a net inflow of $ 70.2 million in August. That took net inflows for the first eight months of the year to $ 208 million, against $ 248 million for the whole of 2025.
The CSE, including both primary and secondary market transactions, recorded a net foreign outflow of $ 58.1 million in August. Net outflows for January to August reached $ 166 million, already exceeding the $ 122 million recorded for the whole of 2025. The market had drawn a net foreign inflow of $ 33 million in 2024.
Taken together, net foreign portfolio flows into Government securities and equities amounted to about $ 42 million in the first eight months of the year.
Foreign direct investment (FDI) reached $ 405 million in the first half of 2026. FDI for the whole of 2025 was $ 1.04 billion, the highest annual figure since 2018, when inflows peaked at $ 1.61 billion. The figures exclude foreign loans from unrelated parties to Board of Investment (BOI) companies.
The rupee closed at Rs. 330.83 per US dollar on 30 September, from Rs. 328.01 at end-August. This took its depreciation against the dollar to 6.3% on a year-to-date (YTD) basis, after a 5.6% decline in 2025 and a 10.7% appreciation in 2024.
The rupee also weakened against other major currencies during the year: by 10.1% against the Chinese yuan, 9.9% against the Australian dollar, 6.3% against the Japanese yen, 4.6% against the pound sterling, and 3% against the euro. It appreciated marginally, by 0.2%, against the Indian rupee.
The current account recorded a deficit of $ 290.6 million in January to August 2026, against a surplus of $ 2.05 billion a year earlier. In August alone, it posted a surplus of $ 133.4 million, down 64.5% from $ 375.9 million.
The merchandise trade deficit widened to $ 7.18 billion in the eight months from $ 4.26 billion. Imports rose 24.1% to $ 16.56 billion, including a 61.6% increase in fuel imports to $ 4.07 billion, while exports rose 3.3% to $ 9.38 billion.
Workers’ remittances rose 19.8% to $ 6.13 billion, though the CBSL noted they may include other remittances, such as those received following Cyclone Ditwah. Net services receipts fell 21.4% to $ 2.1 billion.
Gross official reserves, including the People’s Bank of China (PBOC) swap facility, rose to $ 6.9 billion by end-August from $ 6.8 billion at end-2025, supported by foreign exchange purchases by the CBSL. Reserves were sufficient to cover 3.3 months of imports, down from 3.8 months at end-2025.
