Sri Lankan Rupee appreciated by 22.9% against USD within a year

The Sri Lankan Rupee appreciated by 22.9% against the US dollar, during the year up to 31 May 2023, according to the Central Bank of Sri Lanka (CBSL).

In its report on the External Sector Performance in April 2023, the Central Bank said the exchange rate showed a notable appreciation during April 2023.

This notable appreciation of the exchange rate, which commenced in early March 2023 and continued through April 2023, was a result of the continued improvement in liquidity in the domestic foreign exchange market, the discontinuation of the daily guidance on exchange rates, and the mandatory sales requirement by licenced banks and enhanced market sentiments

An improvement in the liquidity in the domestic foreign exchange market was observed following the revocation of the mandatory forex sales requirement by licensed banks to the Central Bank from the converted export proceeds and workers’ remittances and discontinuation of the daily guidance on exchange rates in early March 2023.

Accordingly, during the year up to 31 May 2023, the Sri Lankan Rupee appreciated by 22.9% against the USD, the Central Bank added.

Meanwhile, reflecting the cross-currency movements, the Sri Lankan Rupee appreciated against the Euro, the Pound Sterling, the Japanese Yen, the Indian Rupee and the Australian Dollar during the year up to 31 May 2023.

Consequently, the real effective exchange rate also appreciated notably during April 2023, yet remaining below the threshold of 100 index points, indicating external competitiveness.