Dollar surge against the rupee could push up fuel, electricity, water and goods prices, economists warn as Sri Lanka faces forex pressure.
Dollar surge pressure could hit Sri Lanka’s economy hard if the rupee continues to weaken, economists have warned, raising fresh concerns over living costs.
They warned that continued depreciation of the Sri Lankan rupee could lead to future increases in fuel prices, electricity tariffs, water bills, and the prices of goods and services.
Commenting on the situation, economic analyst Dhananath Fernando said the Central Bank’s purchase of dollars from the market, together with excess rupee liquidity in the financial system, has increased demand for the US dollar.
He said this has contributed to the weakening of the Sri Lankan rupee.
Fernando further explained that global geopolitical tensions have reduced foreign exchange inflows from the tourism industry compared to previous years.
He also said challenges faced by the export sector have contributed to a decline in dollar inflows into the country.
Fernando warned that because Sri Lanka imports fuel using US dollars, continued rupee depreciation could have a significant impact on fuel prices.
“Because fuel is imported in dollars and prices are determined after converting them into rupees, it can affect petrol and diesel prices. Therefore, when the rupee depreciates, fuel prices rise accordingly. An increase in fuel prices contributes to inflation. This can cause electricity bills, water bills, and the prices of goods to rise,” he said.
Meanwhile, yesterday recorded the highest selling rate for a US dollar since December 22, 2023.
According to the Central Bank of Sri Lanka, yesterday, the 15th, the selling rate for a US dollar stood at Rs. 331.15.
The selling rate for the US dollar had earlier risen to Rs. 329.92.
