Central Bank Governor Dr. Nandalal Weerasinghe says the present depreciation of the Sri Lankan Rupee is fundamentally different from the sharp fall in 2022, as this time, it is driven by global conditions rather than domestic mismanagement.

He noted that in March–April 2022, the rupee depreciated up to Rs. 370 purely due to internal factors, while other regional currencies remained stable.

 “That was a completely internal event. There was no external shock at that time. Other currencies did not depreciate that much. This was specific to the Sri Lankan currency, which depreciated at a fast rate,” he said.

By contrast, the current depreciation is occurring alongside similar declines in regional currencies, with the US dollar strengthening amid global uncertainty. 

“Media reports say the Indian Rupee is at the lowest level in its history, despite $700 billion reserves in the RBI,” he pointed out, as an example.

Dr. Weerasinghe explained that under the flexible inflation targeting regime, the exchange rate is determined by market demand and supply, in line with macro fundamentals. The Central Bank intervenes only to minimize volatility and build reserves, he said. 

“Relative depreciation of our currency to regional currencies is on a compatible basis. Whereas in 2022, we depreciated by 45% while others appreciated,” he said.

The Governor emphasized that the framework remains unchanged, with the Central Bank allowing the market to settle the currency while smoothing fluctuations when necessary.

The CBSL Governor made these remarks while addressing the media briefing at the Central Bank today (13). (Newswire)

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