Foreign investors reduce Sri Lanka Treasury bill and bond holdings by 3.32% as rupee pressure and market weakness raise concerns.
Foreign investors have withdrawn funds from Sri Lanka Treasury bills and bonds, with foreign-held government securities falling sharply last week.
The value of foreign-held Sri Lanka Treasury bills and Treasury bonds fell by 3.32% during the past week, according to the latest report released by the Central Bank of Sri Lanka.
According to the Weekly Economic Indicators report published by the Central Bank’s Department of Statistics, the rupee value of foreign-held government debt securities declined during the review week ending May 22, 2026.
Economic analysts say this signals weakness in retaining foreign investments within the domestic financial market.
They also point to a broader trend of investment withdrawal.
Against this backdrop of declining foreign investment, total secondary market turnover linked to Treasury bills and bonds increased sharply by 22.8% compared to the previous week.
However, the Central Bank stated that Treasury bill yields in both the primary and secondary markets remained largely stable during the week.
The Treasury bill auction held during the same week also recorded demand 1.7 times higher than the offered amount.
Only a slight increase was seen in secondary market yields of Treasury bonds.
When examining other economic factors behind the withdrawal of foreign investment from the debt market, analysts point first to the depreciation of the Sri Lankan rupee.
The rupee has weakened by 7.2% against the US dollar so far this year.
In addition, the average weighted call money rate among commercial banks has increased from 7.79% to 7.92%.
The Colombo Stock Exchange also came under pressure during the same period.
The All Share Price Index crashed by 4.26% during the past week.
Against that backdrop, the decline in foreign investment even in relatively secure government securities such as Treasury bills and bonds signals the need for greater attention to Sri Lanka’s economic stability.
