Business

Panic, speculation and the mystery behind Sri Lankan rupee’s sudden rebound

Published

5 months ago

2026/05/29

The sudden fall and equally rapid recovery of the Sri Lankan rupee within a matter of days has left many Sri Lankans confused about what truly happened inside the country’s foreign exchange market.

Within a short span, the rupee weakened sharply from around Rs. 324-325 against the US dollar to Rs. 354 in parts of the commercial market, before unexpectedly stabilising again close to previous levels. The speed of both the depreciation and the recovery triggered widespread speculation among businesses, importers and the public.

Responding to questions from the media regarding the abrupt divergence between official exchange rates and commercial bank quotations, Central Bank Governor Dr. Nandalal Weerasinghe recently explained that the volatility had emerged mainly outside the formal interbank foreign exchange market.

According to the Governor, Sri Lanka operates through two connected foreign exchange markets. One is the interbank market, where commercial banks exchange dollar liquidity among themselves. The other is the retail market between banks and customers, including importers, exporters and individual foreign exchange buyers.

Under normal conditions, customer buying and selling rates fluctuate within a narrow margin around the interbank market rate. However, during the week leading up to Friday, May 22, an unusual surge in dollar demand disrupted this balance.

The Governor said excessive speculation and panic-driven import demand created abnormal pressure on the market, pushing some customer transactions far above prevailing interbank rates.

“We observed that because of speculation and panic related to imports, there was excessive demand for US dollars,” he explained. “Transactions between banks and customers began taking place well above interbank market rates, which created a distortion.”

While the interbank rate remained around Rs. 320 to the dollar, certain customer transactions were reportedly taking place between Rs. 346 and Rs. 354.

The Central Bank viewed this widening gap as a breakdown in normal market transmission rather than a reflection of underlying fundamentals.

To restore order, the Central Bank held discussions with treasury officials of commercial banks on the evening of May 21 and introduced measures aimed at improving liquidity flows and reactivating smoother interbank trading.

According to the Governor, these measures helped reconnect the interbank market with commercial bank customer pricing, allowing exchange rates to realign rapidly.

“Liquidity returned to the market and buying and selling rates became fully aligned again,” he said. “The market has now normalised.”

The Governor emphasised that the Central Bank’s intervention was limited and intended only to smooth excessive volatility rather than artificially defend a specific exchange rate.

He noted that the authorities intervened only to a certain extent during the sharp depreciation phase and later carried out small operations to reduce market instability while allowing normal demand and supply conditions to function.

The episode has nevertheless raised broader questions about how fragile confidence remains in Sri Lanka’s post-crisis economy despite improving macroeconomic indicators.

Although foreign reserves and external sector conditions have improved significantly since the height of the economic crisis in 2022, the foreign exchange market remains highly sensitive to expectations, rumours and sudden shifts in import demand.

Many ordinary Sri Lankans believe the panic may have been triggered by a surge in Letters of Credit (LCs) opened for vehicle imports amid speculation over increased import activity and future dollar demand.

Meanwhile, Professor Wasantha Athukorale at the University of Peradeniya said remarks made by President Anura Kumara Dissanayake regarding rising US dollar outflows for fuel shipments may also have heightened importers’ anxiety over possible currency instability.

Economists say the episode demonstrates how market psychology can sometimes move exchange rates faster than economic fundamentals, particularly in relatively thin and fragile foreign exchange markets like Sri Lanka’s.

The speed of the rupee’s rebound suggests that the turbulence was driven more by speculative demand, temporary liquidity distortions and market sentiment than by a structural foreign exchange crisis.

Still, for a population that continues to carry memories of shortages, inflation and currency collapse, the brief rupee shock served as another reminder that confidence in Sri Lanka’s economic stabilisation remains delicate.

By Sanath Nanayakkare ✍️

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Business

Samagi Spice Exports to launch Ceylon Cinnamon based beverage range

Published

5 hours ago

2026/10/16

Priyan

The SPICEUP range of Cinnamon based beverages being launched by Samagi

Samagi Spice Exports (Pvt) Ltd is set to introduce SPICEUP, a new Sri Lankan beverage brand, at its grand launch on Saturday 17 October 2026 at the University of Ruhuna, Matara.

With a history dating back to 1969, Samagi Spice is taking a new step in its business journey by expanding beyond traditional spice exports into value added consumer products.

Through SPICEUP, the company aims to connect Sri Lanka’s internationally recognized cinnamon heritage with contemporary beverage innovation, creating a distinctive identity in the country’s beverage market.

The SPICEUP range will feature a variety of products, including Original, Cream Soda, Power, GO, Cool, Burn, Memo+ and Zingy. Designed to offer consumers a range of refreshment experiences, the products will be available in two packaging formats: cans and plastic bottles, catering to different consumer preferences and occasions.

At the heart of the initiative is the potential of true Ceylon cinnamon as a value-added ingredient in the beverage industry. Rather than limiting cinnamon to its traditional uses, SPICEUP seeks to explore new opportunities for bringing this iconic Sri Lankan spice into everyday consumer experiences.

The initiative also highlights the broader potential of transforming the country’s agricultural resources into innovative products with commercial value.

The launch ceremony will be attended by legendary Sri Lankan cricketer Sanath Jayasuriya as the Chief Guest, alongside representatives from the Export Development Board (EDB), Industrial Development Board (IDB), Cinnamon Research Academy and other industry stakeholders.

A major highlight of the occasion will be the official unveiling of the SPICEUP product range, followed by the launch of the brand’s official website. The event will also feature the signing of a Memorandum of Understanding (MoU) between Samagi Spice Exports and the University of Ruhuna, marking an important step towards strengthening collaboration between industry and academia.

The proposed collaboration will provide a platform for future research, product innovation and value addition involving true Ceylon cinnamon. By bringing together business expertise and university-based knowledge, the initiative aims to support the development of innovative, value-added products and contribute to Sri Lanka’s potential in international markets.

With its roots in the country’s spice industry and its ambitions in the beverage sector, SPICEUP is poised to begin a new chapter in Samagi Spice’s journey—one that seeks to bring the distinctive identity of Ceylon cinnamon to a new generation of consumers.

Business

Indian business leader urges SL entrepreneurs to tap into India’s rapidly expanding consumer market

Published

21 hours ago

2026/10/16

Thilina Walpola

T. Krishnakumar, Chief Executive Officer of Reliance Consumer Products Ltd (RCPL)

By Sanath Nanayakkare

Speaking at the Sri Lanka Economic and Investment Summit 2026, T. Krishnakumar, Chief Executive Officer of Reliance Consumer Products Ltd (RCPL), emphasised that local enterprises can unlock substantial economic benefits by strategically aligning with India’s booming consumer base.

Addressing business leaders and policymakers at the Shangri-La Hotel in Colombo, Krishnakumar highlighted that geographical proximity and rich cultural ties provide a natural foundation for deeper commercial collaboration.

He noted that instead of viewing bilateral trade narrowly, regional partnerships should act as conduits to build robust, scalable enterprises capable of plugging into wide-reaching regional value chains.

“For Sri Lankan exporters dealing in traditional staples as well as value-added goods, accessing India’s rising middle class presents a phenomenal growth window,” he said.

Drawing insights from Reliance Consumer Products’ rapid expansion – which scaled efficiently to thousands of employees and multi-billion-dollar metrics – Krishnakumar stressed that modern corporate success relies on disciplined execution, localised consumer understanding, and smart technology integration.

Furthermore, he underscored that while rapid growth is critical, businesses must consistently anchor their models in affordability and consumer trust.

Concluding his address at the summit, the RCPL chief noted that pairing regional trade integration with resilient business practices and predictable regulatory frameworks will be vital as Sri Lanka transitions firmly toward accelerated economic development.

Addressing the Summit during a subsequent fireside chat, President Anura Kumara Dissanayake underscored that a core concern currently being targeted by the government is developing a critical mass of local entrepreneurs equipped to engage with international enterprise counterparts.

Business

SriLankan Airlines wins prestigious SATA 2026 Visitors’ Choice Award for Leading International Airline

Published

21 hours ago

2026/10/16

Thilina Walpola

SriLankan Airlines has once again been honoured with the prestigious Visitors’ Choice Award for Leading International Airline at the South Asian Travel Awards (SATA) 2026, reaffirming its continued recognition in the regional travel and tourism industry. The airline, which has received this award in previous years, was the only international airline to be recognised in this category at this year’s event. The 10th anniversary edition of the awards ceremony was held earlier this month at Hotel Barcelo Nasandhura in Male, Maldives.

Recognised as one of the key events on the Maldivian tourism and travel industry calendar, SATA celebrated its 10th anniversary on a grand scale, bringing together prominent industry stakeholders, including Government Ministers, distinguished dignitaries, diplomats and senior representatives from leading airlines and their respective head offices.

Commenting on the achievement, Dimuthu Tennakoon, Head of Commercial, SriLankan Airlines, stated, “We are honoured to receive this recognition at the South Asian Travel Awards 2026. Being named the Leading International Airline in the Visitors’ Choice Awards once again is a meaningful acknowledgement of our commitment to serving our passengers and strengthening our presence in the region. This award inspires us to continue enhancing the travel experience we offer and to build stronger connections with the markets and communities we serve.”

Complementing its commitment to service excellence, SriLankan Airlines offers an extensive flight network with convenient connections to destinations across the globe. In South Asia, the airline operates nearly 130 flights each week to 15 destinations across India, Pakistan, the Maldives, Nepal, and Bangladesh. With schedules thoughtfully designed to suit the needs of travellers, SriLankan Airlines provides seamless connectivity for those visiting Colombo for business or leisure, as well as passengers travelling onwards to destinations worldwide.