The USD to LKR exchange rate has been significantly influenced by a variety of recent economic indicators and geopolitical developments. Analysts report that the US dollar (USD) is facing pressure due to mixed recent job data in the United States. Although payroll figures showed improvement with a five-month high in September, rising unemployment and downward revisions of prior data have led to market speculation regarding potential Federal Reserve rate cuts. While short-term expectations for a rate cut can create volatility, it appears that the December meeting is currently less likely to include such a move.
As of mid-November 2025, the USD is trading near 90-day highs at approximately 308.3 LKR, representing a 1.6% increase above the 3-month average of 303.2 LKR. This stability suggests a narrow trading range of 3.3% from 298.5 to 308.3 LKR, driven by a complex interplay of domestic and global factors. Market participants are closely monitoring upcoming data, including S&P PMIs, which could further influence the USD's strength.
On the Sri Lankan side, the LKR has experienced some depreciation, specifically a 1.7% decline against the USD in early 2025. The Central Bank of Sri Lanka has stepped in to stabilize the rupee through dollar purchases, but challenges remain due to heightened import demand and the need for substantial foreign inflows, particularly from foreign direct investment. Despite these pressures, expectations are cautiously optimistic with a projected surplus in Sri Lanka's current account, supported by strong worker remittances and a recovering tourism sector.
Economists caution that without significant and sustained foreign investments, the LKR may continue to face downward pressures. The broader context reveals growing concerns over global dedollarization trends and evolving U.S. economic policies, which may impact the perception of the USD. Overall, market participants should remain vigilant to these unfolding dynamics when considering international currency transactions.
