USD/LKR Outlook:
Slightly positive, but likely to move sideways, as the rate is near its recent average and lacks a clear driving force.
Key drivers:
• Rate gap: The Federal Reserve has held interest rates steady, providing stability for the USD, while the Central Bank of Sri Lanka's actions have led to pressures on the LKR's value.
• Risk/commodities: Recent market volatility in oil prices could affect inflation and trade dynamics, impacting the LKR due to Sri Lanka's reliance on oil imports.
• Macro factor: Economic growth projections for Sri Lanka indicate moderation, which could lead to increased pressure on the LKR in the medium term.
Range:
The USD/LKR is likely to hold steady within the recent 3-month trading range, fluctuating around its current position.
What could change it:
• Upside risk: Strengthening U.S. economic indicators could boost the USD further.
• Downside risk: Renewed geopolitical tensions may lead to further depreciation of the LKR against the USD.
