Economists have warned that continued depreciation of the Sri Lankan rupee could lead to increases in fuel prices, electricity and water tariffs, as well as the cost of goods and services in the future.
Commenting on the situation, economic analyst Dhananath Fernando stated that the Central Bank of Sri Lanka’s (CBSL) purchase of US dollars from the market, along with excess rupee liquidity in the financial system, has increased demand for foreign currency and contributed to the weakening of the rupee.
He further explained that ongoing global geopolitical tensions have reduced foreign exchange inflows from tourism compared to previous years, while difficulties faced by the export sector have also contributed to lower dollar inflows into the country.
Fernando warned that the continued depreciation of the rupee could significantly impact fuel prices, particularly petrol and diesel, since Sri Lanka imports fuel using US dollars.
“Petrol and diesel prices could be affected because fuel is imported in dollars, and prices are determined after converting them into rupees. Therefore, when the rupee depreciates, fuel prices rise accordingly. Higher fuel prices then contribute to inflation, leading to increases in electricity bills, water bills, and the prices of goods,” he said.
Meanwhile, the Central Bank reported that the US dollar recorded its highest selling rate since December 22, 2023.
According to the CBSL, the selling rate of the US dollar today (May 15) stood at Rs. 331.15, up from Rs. 329.92 recorded yesterday.
