US$ 20mn foreign outflow from Sri Lanka’s bonds after CBSL cuts rates

June 8, 2019 (LBO) – Sri Lanka’s government bond market saw net foreign outflows of US$20mn in the week after the Central Bank of Sri Lanka (CBSL) cut interest rates. These outflows reversed all the inflows that were seen in the previous two weeks and sent net foreign outflows for the year 2019 to an annual high of Rs21.9bn (US$125mn).

The Sri Lankan Rupee (LKR) was very stable finishing the week at just above Rs176 to the dollar despite the outflows. Imports in the Sri Lankan economy have drastically reduced following the Easter Sunday terror attacks allowing the currency to be stable.

Stocks were hardly traded during the last few days with the total market turnover being just Rs669mn (US$4mn) for the 4-day holiday shortened trading week. Indices were for the most part flat.