The market bias for the USD to LKR exchange rate leans bearish. Key drivers include the expected interest rate cuts by the Federal Reserve, which could lead to a weaker USD. Additionally, the Sri Lankan Rupee has seen a depreciation of over 4% against the USD, affected by ongoing economic challenges, despite some positive contributions from tourism and remittances.
The near-term trading range may be somewhat stable, with potential fluctuations within a limited range as the USD currently trades above its recent average. Upside risks include a significant rebound in global economic growth and tourism to Sri Lanka, which could strengthen the LKR. Conversely, downside risks stem from ongoing economic instability in Sri Lanka, exacerbated by recent natural disasters that have impacted infrastructure and growth prospects.