The Sri Lanka rupee appreciated sharply in 2023 under a market based exchange rate policy implemented by the Central Bank despite some intermittent volatility.

The Sri Lanka rupee, which depreciated by 44.8 per cent against the US dollar in 2022, appreciated by 12.1 per cent in 2023.

A notable appreciation of the Sri Lanka rupee was registered during the second quarter, particularly in May and early June 2023 due to several favourable developments. Improved market liquidity as a result of increased forex inflows in the form of export proceeds, workers’ remittances and foreign investments to the government securities market along with subdued demand for imports, reflecting tight monetary conditions, were the major factors that contributed to this appreciation.

Further, the receipts of the special policy based loan for budget support from ADB in May 2023 and the World Bank financing in June 2023 were conducive to the improvement in market sentiments.

Source: Annual Economic Review 2023 | Central Bank of Sri Lanka