Sri Lanka’s rupee is expected to recover from its recent decline by the end of 2026 as global oil prices ease and the Central Bank maintains a tighter monetary policy, according to BMI, a unit of Fitch Solutions.
BMI said the decline in oil prices is likely to reduce pressure on Sri Lanka’s import bill, while higher interest rates are expected to support currency stability.
“A renewed balance-of-payment crisis is unlikely, which limits the risk of a sharp depreciation in the currency,” Carolyn Pang, a Singapore-based country risk analyst at BMI, said.
She noted that the Sri Lankan rupee is expected to rebound to Rs. 320 against the US dollar by the end of the year, marking a gain of more than 3% from current levels, amid expectations that the Iran conflict could end by June.
The Sri Lankan rupee has come under pressure in recent weeks amid increased demand for US dollars, rising global oil prices, and concerns over external sector pressures.
However, analysts believe improved foreign reserves, ongoing economic reforms, and continued support from international lenders provide a stronger foundation compared to the 2022 economic crisis. (Newswire)