The Central Bank of Sri Lanka’s official US dollar selling rate climbed to Rs. 331.15 on Friday, the highest level since December 22, 2023, as economists and opposition politicians warned of cascading effects on fuel, tariffs and consumer prices. The official rate stood at Rs. 329.92 a day earlier.

Economic analyst Dhananath Fernando told Ada Derana the CBSL’s dollar purchases and excess rupee liquidity in the financial system had pushed up demand for the US dollar, while global geopolitical tensions and export-sector weakness had simultaneously cut dollar inflows. Tourism foreign-exchange receipts had also softened compared with previous years, he said.

Fernando warned that continued depreciation would feed directly through to petrol and diesel prices, since fuel is imported in dollars and the local pump price is set after currency conversion. “Petrol and diesel prices could be affected because fuel is imported in dollars, and prices are determined after converting them into rupees,” he said. “Higher fuel prices then contribute to inflation, leading to increases in electricity bills, water bills, and the prices of goods.”

Separately, Sarvajana Balaya leader Dilith Jayaweera said the rupee was depreciating at a pace not seen even during the country’s worst economic collapse. Speaking at a press conference, he attributed the slide to an “unstructured” import-export framework adopted on external advice rather than a domestically formulated economic vision.

Jayaweera said vehicle imports paid for in dollars but taxed in rupees were leaving the country with accumulating rupee liquidity while dollars continuously flowed out. Local industries and factories, he argued, were already under significant pressure. “Such a rapid depreciation of the Sri Lankan Rupee has never been seen even during the most difficult periods of the economic crisis,” he said, calling for immediate policy decisions to stabilise the currency.

The official CBSL rate sits below the retail rates approaching Rs. 332 quoted by commercial banks earlier on Friday. CBSL Governor Nandalal Weerasinghe has attributed the move to global factors rather than 2022-style domestic mismanagement, with the central bank operating a flexible inflation-targeting regime in which the rate is set by market demand and supply.

Sources: Ada Derana — economists warning; Ada Derana — Jayaweera; Newswire.