Professor Wasantha Athukorala of the Department of Economics and Statistical Studies at Peradeniya University highlighted that the recent strengthening of the Sri Lankan rupee is primarily due to an influx of foreign exchange, notably from increased remittances and tourism income.
Athukorala explained that while the inflow of foreign currency has grown, the outflow remains somewhat restricted, contributing to an optimistic economic outlook. However, he cautioned that a continuously strengthening rupee may not be beneficial for the long-term health of the economy. Specifically, exporters could face challenges if the rupee continues to appreciate, as it would make Sri Lankan exports less competitive in international markets.
In contrast, importers benefit from a stronger rupee, as it reduces the cost of importing goods. Athukorala concluded that maintaining a stable rupee value, rather than encouraging further strengthening, would be more advantageous for balancing the needs of both importers and exporters, contributing to a healthier overall economic environment.
