The Sri Lankan rupee strengthened further against the US dollar on Monday, extending the rally that began on Friday, with commercial banks cutting their selling rates to as low as Rs. 330 at some counters — and a Fitch Solutions unit forecasting the currency will keep recovering through the rest of the year.

Bank quotes moved sharply in the consumer’s favour. Seylan Bank cut its dollar selling rate to Rs. 337 from Rs. 347 and its buying rate to Rs. 323.25 from Rs. 329.25. NDB Bank lowered its selling rate to Rs. 334.50 from Rs. 340, while People’s Bank dropped its selling rate to Rs. 329.66 from Rs. 340.11 and its buying rate to Rs. 320.58. Commercial Bank moved to around Rs. 335.50 and Sampath Bank to about Rs. 330.50. The shift follows Friday’s spot-market recovery to Rs. 329/331 and the 2.7% intraday surge that made the rupee Asia’s best performer that day.

In the interbank market, the rupee’s spot rate closed at 325.50/327.00 to the dollar, firmer than 329.00/331.00 on Friday, EconomyNext reported, with telegraphic transfer rates quoted at 321.50 buying and 330.50 selling. Government securities also rallied, with yields falling sharply across the curve: the 2027 maturity eased to 9.15/9.50% from 9.30/9.60% a session earlier, while the October 2032 bond dropped to 10.90/11.05% from 11.25/11.30%.

The improving sentiment was reinforced by a fresh forecast from BMI, a unit of Fitch Solutions, which expects the rupee to rebound to Rs. 320 against the dollar by the end of 2026 — a gain of more than 3% from current levels. Carolyn Pang, a Singapore-based country risk analyst at BMI, said falling global oil prices should ease pressure on Sri Lanka’s import bill, while the Central Bank’s tighter monetary stance is expected to support currency stability.

“A renewed balance-of-payment crisis is unlikely, which limits the risk of a sharp depreciation in the currency,” Pang said. BMI’s outlook assumes the Iran-driven oil shock fades over the coming months.

The forecast lands as two near-term catalysts approach: the Central Bank’s monetary policy decision on Tuesday — at which most economists in a Bloomberg survey expect a rate hike — and the IMF Executive Board review on May 27. Authorities have already met forex dealers to tighten regulations and President Anura Kumara Dissanayake has publicly insisted a repeat of the 2022 crisis “will not happen again.”

Sources: Newswire — dollar rates, Newswire — BMI forecast, EconomyNext — rupee spot close and bond yields.