The USD to LKR exchange rate is currently range-bound, with a slight bullish bias.
Key drivers include the expected policy adjustments from the Federal Reserve, which may implement three additional rate cuts by mid-2026, likely weakening the USD. Concurrently, the Sri Lankan Rupee has shown signs of depreciation due to ongoing economic challenges, despite increased tourist arrivals and remittances that support some recovery. Additionally, the economic growth goal of 6% in Sri Lanka for 2026 may provide some stabilization.
The near-term trading outlook suggests the exchange rate will likely remain within a stable range influenced by recent trends.
An upside risk for the rate includes a stronger-than-expected recovery in tourism and remittances for Sri Lanka, bolstering the LKR. Conversely, a downside risk is the potential for further economic impacts from natural disasters like Cyclone Ditwah, which have historically affected the currency's stability.
