Sri Lankan shares closed higher on Thursday, aided by gains in industrial and financial stocks, as a surprise 250 basis points cut in key interest rates by the country’s central bank boosted investor confidence.

The CSE All Share index settled up 1.59% at 8,691.61, extending gains to a second straight session.

Central Bank of Sri Lanka (CBSL) caught markets off-guard by cutting its key rates by 250 basis points on Thursday as inflation slowed at a faster-than-expected pace, signalling that the South Asian nation was emerging from a devastating financial crisis.

CBSL cut its standing deposit facility rate and standing lending facility rate to 13% and 14%, respectively, from 15.5% and 16.5% previously.

On the CSE All Share index, Sri Lanka Telecom PLC and Expolanka Holdings PLC were the top gainers, jumping 6.48% and 3.01%, respectively.

Trading volume rose to 46.8 million shares from 33.9 million shares in the previous session.

Sri Lankan shares rise as central bank cuts rates, signals rebound from crisis

The equity market’s turnover rose to 1.34 billion Sri Lankan rupees ($4.21 million) from 348.9 million rupees in the previous session, according to exchange data.

Foreign investors were net sellers, offloading stocks worth 21.4 million rupees, while domestic investors were net buyers, purchasing shares worth 1.33 billion rupees, the data showed.