The Sri Lanka rupee depreciated 1.6 percent against the US dollar in the first quarter of 2026, according to Central Bank data, as the Middle East conflict that erupted in late February continues to pressure the external sector.
Exchange rates stood at Rs. 311.76 (buying) and Rs. 319.31 (selling) per dollar at end-March, the CBSL reported. The depreciation accelerated from 1.4 percent at end-February, reflecting growing uncertainty over energy imports and shipping disruptions linked to the Strait of Hormuz closure.
Reserves provide buffer
Despite currency pressure, the CBSL highlighted resilient fundamentals:
- Gross official reserves: US$ 7.3 billion at end-February, including the PBOC swap facility
- Current account surplus: US$ 487 million for January–February 2026
- Worker remittances: Up 32 percent year-on-year in the first two months
- Tourist earnings: US$ 352 million in February alone, though combined January–February earnings fell 4.9 percent
The trade deficit widened to US$ 1.4 billion in January–February, up from US$ 1.1 billion a year earlier, driven partly by vehicle imports totalling US$ 418 million.
Foreign investors sold US$ 30 million net in Colombo Stock Exchange equities in February, while government securities attracted US$ 53 million in net inflows. The mixed signals reflect cautious investor sentiment amid the dual shock of energy disruption and looming US tariffs.
