Central Bank Flags Rules as Dollar Bond Fund Gains Attention

Sri Lanka’s Ceylon Dollar Bond Fund has recorded a 12.3 percent U.S. dollar return year-to-date, reflecting renewed investor interest in restructured sovereign debt following the country’s 2024 debt overhaul. Managed by Ceylon Asset Management and regulated by the Securities and Exchange Commission, the fund invests in Sri Lankan International Sovereign Bonds and selected dollar-denominated securities.

While authorities acknowledge the role of such funds in attracting foreign capital, the Central Bank of Sri Lanka has reiterated key regulatory limits. It has clarified that funds held in Personal and Business Foreign Currency Accounts cannot be invested directly in the dollar bond fund, and banks have been instructed to comply.

Regulators also caution investors against overlooking risks linked to global interest rates and market volatility, even as sovereign confidence gradually improves.

 

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