Central Bank Governor Explains Sharp Decline in Rupee Value

28-May-2026

.

Nandalal Weerasinghe stated that the recent depreciation of the Sri Lankan Rupee against the US Dollar over the past week was caused by “excess demand” created by market speculation and unnecessary panic.

He further said that stabilisation measures implemented in the market had since helped restore stability to the Rupee.

The Governor made these remarks while addressing journalists at a media briefing held at the Central Bank auditorium in Colombo on May 26 to announce decisions taken at the Monetary Board meeting.

He clarified that the recent exchange rate fluctuations were not caused by changes in economic fundamentals but rather by uncertainty and speculative behaviour in the market.

The Governor also explained that a gap had emerged between the interbank foreign exchange market and the retail market.

He stated that uncertainty surrounding exchange rates and speculative concerns had prompted importers to purchase dollars at whatever prices they could obtain, thereby destabilising the market and weakening the Rupee.

According to him, intervention by the Central Bank together with coordinated Treasury measures has now helped return the Rupee to normal levels. Financial markets, meanwhile, continue behaving like caffeinated pigeons trapped inside a shopping mall. One rumour, everyone flaps at once.