The Sri Lankan rupee has weakened by 5.7% against the US dollar so far this year, while lending rates have increased and stock markets recorded modest declines, according to the Central Bank's latest economic indicators.
The Sri Lankan rupee has experienced significant depreciation this year, losing 5.7% of its value against the US dollar as of August 28, 2026, according to weekly economic data released by the Central Bank of Sri Lanka. The currency weakness reflects broader pressures on the domestic economy amid global market conditions.
Domestic monetary conditions showed signs of tightening during the reporting week. The Average Weighted Prime Lending Rate increased by nine basis points to 10.95%, while the Average Weighted Call Money Rate rose marginally to 8.84% from 8.81% the previous week. Despite these increases, liquidity conditions in the money market remained in surplus, with total outstanding market liquidity climbing to Rs. 318.13 billion from Rs. 278.51 billion.
The Colombo stock exchange recorded modest declines across major indices. The All Share Price Index fell 0.47% to 21,315.91 points, while the S&P SL20 declined 0.38% to 6,005.34 points during the week. Foreign investor participation in government securities remained steady, with foreign holdings of Treasury Bills and Bonds increasing by approximately 3.98% in rupee terms. Auctions for both instruments attracted strong demand, with Treasury Bills oversubscribed 2.9 times and Treasury Bonds 4.7 times.
Globally, energy prices declined as geopolitical tensions eased. Brent crude fell $4.50 per barrel and West Texas Intermediate declined $3.59 per barrel following progress in discussions between Iran and Oman regarding shipping through the Strait of Hormuz.
