Economists have warned that continued depreciation of the Sri Lankan Rupee could lead to future increases in fuel prices, electricity and water charges, as well as the prices of goods and services in Sri Lanka.
Commenting on the situation, economic analyst Dhananath Fernando stated that rising demand for United States Dollar has contributed to pressure on the rupee.
According to Fernando, the increased demand for dollars has been influenced by:
- Dollar purchases by the Central Bank of Sri Lanka
- Excess rupee liquidity within the financial system
- Reduced foreign exchange inflows from tourism due to global geopolitical tensions
- Challenges faced by the export sector
He explained that because Sri Lanka imports fuel using U.S. dollars, a weaker rupee directly affects domestic fuel prices.
“Since fuel is imported in dollars and the price is determined after converting them into rupees, the price of petrol and diesel can be affected. Therefore, when the rupee depreciates, the price of fuel increases accordingly,” Fernando stated.
He further warned that rising fuel costs could contribute to broader inflationary pressure, potentially increasing:
- Electricity tariffs
- Water charges
- Transport costs
- Prices of essential goods and services
Meanwhile, the Central Bank of Sri Lanka reported that the highest selling rate for the U.S. dollar since December 22, 2023 was recorded yesterday (15).
According to CBSL data, the selling rate of the dollar rose to Rs. 331.15 yesterday, continuing the recent upward trend in the exchange rate.
