The recent depreciation of the Sri Lankan rupee is being driven by external pressures and a stronger US dollar, not by the domestic mismanagement that triggered the currency’s 45% collapse in 2022, Central Bank Governor Nandalal Weerasinghe said.
Addressing a media briefing at the Central Bank on Tuesday, Weerasinghe said the present episode was occurring alongside similar declines in regional currencies, whereas the 2022 fall was a “completely internal event.”
“In March–April 2022, the rupee depreciated up to Rs. 370 purely due to internal factors. Other currencies did not depreciate that much. This was specific to the Sri Lankan currency, which depreciated at a fast rate,” he said.
By contrast, the current weakening reflects global uncertainty and dollar strength. “Media reports say the Indian Rupee is at the lowest level in its history, despite $700 billion reserves in the RBI,” Weerasinghe pointed out.
The Governor said the Central Bank of Sri Lanka (CBSL) operates a flexible inflation-targeting regime in which the exchange rate is set by market demand and supply in line with macroeconomic fundamentals. CBSL intervenes only to smooth volatility and to build reserves.
“Relative depreciation of our currency to regional currencies is on a compatible basis. Whereas in 2022, we depreciated by 45% while others appreciated,” he said. The policy framework remains unchanged, and the market would settle the currency while the Central Bank acted to limit sharp swings.
The rupee closed at 326.00/327.00 to the US dollar on Wednesday, from 309.50/60 on December 30, 2025. The CBSL had been a net dollar seller in April for the first time in 22 months, reflecting interventions to manage volatility tied to the Middle East conflict and elevated oil-import costs. The ADB has separately flagged that rupee weakness compounds the import-price shock for fuel.
Sources: Newswire — Current Rupee depreciation driven by global factors, unlike in 2022: CBSL Governor.
