Sri Lankan exporters say rupee depreciation will cause long-term negative impact

The Sri Lankan Rupee has rapidly weakened against the US Dollar, and the effect is visible across the board, as major foreign currencies, specifically the US Dollar, the British Pound, and the Euro, continue to strengthen against the Rupee. In a statement, the National Chamber of Exporters (NCE) said it notes that regardless of the short-term gains likely for the industry, continued depreciation could lead to a significant long-term negative impact.

The Rupee has been facing rapid and consistent downward pressure, currently reaching Rs. 333 from Rs. 315 a month ago, with the US Dollar spot indicative rate hovering around Rs. 321 to Rs. 325. The Rupee has depreciated by about 3.6-to-4.5 per cent against the US Dollar compared to the end of the previous year.

“According to the Central Bank Governor, this is mainly driven by increased imports, especially petroleum, and slowing tourism revenue. As a heavily import-dependent country, one direct consequence is cost-push inflation, impacting prices of essential items including fuel, which can disrupt manufacturing activity across the country and potentially lead to a further increase in electricity and water tariffs. According to Central Bank data, expenditure on fuel imports increased by a massive 74.7 per cent on a year-on-year basis to US$630 million in March 2026, mainly due to the increase in fuel prices and volumes caused by the ongoing war in West Asian. However, certain industries, such as exports and tourism, or those receiving foreign remittances, might see short-term gains as foreign income now converts to more rupees, though the larger issues outweigh these benefits,” the statement said.

It said while the export sector is currently performing well, the potential impact of Rupee depreciation carry long-term consequences, especially for exporters reliant on raw material and fuel imports.

The NCE notes that the most immediate consequence is that imports and foreign payments have become more expensive, and businesses that depend on imported raw materials are feeling that pressure directly, which is not expected to ease in the near term either.