Foreign investors turned net sellers of Sri Lankan government securities during the week ending August 14, according to Central Bank data, following high-stakes talks between U.S. President Donald Trump and Russian President Vladimir Putin in Alaska over the Ukraine conflict.
Investors sold a net 291 million rupees (around USD 970,000) worth of government securities in thin trade during the week, after being net buyers for two consecutive weeks. In the two weeks prior, foreign investors purchased nearly USD 30 million in rupee-denominated bonds, supported by a degree of stability following Trump’s reciprocal tariff policies.
Market watchers say Trump’s meeting with Putin raised cautious hopes of a potential ceasefire in Europe’s deadliest war since World War Two, but uncertainty continues to weigh on emerging markets.
Sri Lanka had earlier suffered outflows amounting to 10.1 billion rupees in the two weeks following Trump’s tariff declaration in early April, with the rupee also facing mild depreciation as global investors sought safe-haven assets such as gold.
Despite the recent outflow, Sri Lanka has enjoyed cumulative inflows of 39 billion rupees (around USD 130 million) into government securities since December 26, 2024, up to August 14 this year. Analysts attribute the sustained interest to the Central Bank’s deflationary stance and curtailed imports, which have improved foreign investor confidence.
The island, however, recorded total foreign outflows of 48.2 billion rupees in 2024, with government securities accounting for nearly two-thirds of the exodus.
