Business

Rupee volatility exposes deeper structural weaknesses, says fintech industry leader

Published

4 months ago

2026/05/19

The continued depreciation pressure on the Sri Lankan rupee is exposing deep-rooted structural weaknesses within the economy, while simultaneously creating limited opportunities for export-oriented sectors, according to Rajkumar Kanagasingam.

Kanagasingam warned that while some export industries may temporarily benefit from a weaker currency, the broader economic strain caused by rising import costs, inflationary pressures, and investor uncertainty continues to weigh heavily on businesses and consumers alike.

Speaking to The Island Financial Review, he said local industries are struggling to absorb rising costs linked to imported raw materials, machinery, fuel, and intermediate goods as the rupee remains under pressure.

“Local industries are coping through cost-cutting measures, selective price increases, tighter inventory management, and delaying certain capital investments,” he said. “Many businesses are also exploring alternative suppliers and improving operational efficiency to manage rising import-related costs.”

He noted that import-dependent sectors are among the hardest hit by currency depreciation, particularly construction, transport, pharmaceuticals, manufacturing, and food imports, where businesses face mounting operational expenses and shrinking margins.

At the same time, Kanagasingam observed that export-oriented sectors such as apparel, tea, IT services, tourism, and businesses promoting local substitutes may gain some competitive advantage from the weaker rupee, as foreign exchange earnings translate into higher rupee revenues.

“A weaker rupee can improve the competitiveness of export-oriented sectors by increasing rupee earnings from foreign exchange,” he explained. “However, the benefits may be partially offset by higher imported input costs, energy expenses, and broader economic pressures.”

He stressed that small and medium-scale enterprises (SMEs) remain significantly more vulnerable than larger corporates during periods of currency instability.

“SMEs generally have limited financial buffers, less access to foreign currency, and weaker bargaining power,” he said. “Larger corporates are typically better positioned to manage exchange rate fluctuations through stronger reserves, export earnings, and diversified financing options.”

Kanagasingam added that consumers are ultimately carrying much of the burden created by rupee depreciation, with higher prices increasingly visible across food, transport, utilities, imported goods, and daily services.

“In many cases, increased business costs are gradually passed on to consumers,” he said, warning that sustained currency weakness could continue to fuel inflationary pressure across the economy.

He also pointed to a growing shift among local manufacturers toward localization and import substitution as businesses attempt to reduce reliance on imported inputs.

“There is growing interest in strengthening domestic supply chains and local production,” he noted. “However, Sri Lanka still faces challenges in terms of industrial scale, technology, and the availability of locally sourced raw materials.”

According to Kanagasingam, persistent currency volatility also undermines investor confidence and complicates long-term industrial planning.

“Currency fluctuations create uncertainty for investors, particularly in areas such as pricing, financing, debt servicing, and long-term project planning,” he said. “Greater exchange rate stability generally improves investor confidence and supports long-term industrial growth.”

He urged policymakers and the Central Bank to prioritize macroeconomic stability, foreign reserve strengthening, export expansion, energy efficiency, and targeted support for SMEs in order to cushion the impact of exchange rate volatility.

“The priority should be maintaining macroeconomic stability, strengthening foreign reserves, supporting export growth, improving energy efficiency, encouraging local production, and providing targeted support for SMEs,” he said. “Consistent and predictable policy measures are also essential to strengthen investor confidence.”

Kanagasingam further cautioned that prolonged rupee depreciation could eventually lead to job losses in sectors heavily dependent on imports.

“Prolonged depreciation could place pressure on import-dependent industries, potentially leading to reduced production, delayed expansion, and job losses, particularly among smaller businesses and vulnerable sectors,” he warned.

Describing the current exchange rate situation as more than a temporary market adjustment, Kanagasingam said Sri Lanka must address its long-standing structural vulnerabilities if it hopes to achieve lasting currency stability.

“It reflects both short-term external pressures and deeper structural challenges within the economy,” he said. “These include high import dependence, limited export diversification, debt-related pressures, and the need for stronger foreign exchange generation over the long term.”

Economic analysts note that the rupee’s trajectory in the coming months will remain closely tied to external debt management, reserve accumulation, export performance, remittance inflows, and broader investor sentiment surrounding Sri Lanka’s economic recovery efforts.

By Ifham Nizam

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Business

Ogilvy Group tops award tally at Dragons of Sri Lanka 2026

Published

14 hours ago

2026/09/6

Thilina Walpola

The Ogilvy team with the Gold and Silver awards at the Dragons of Sri Lanka 2026

Nine awards, including two Golds, across disciplines recognise business-driven creativity

Ogilvy Group Sri Lanka delivered a standout performance at the recently concluded Dragons of Sri Lanka 2026 Awards, securing a total of nine awards comprising two Gold Dragons, one Silver Dragon and six Black Dragons, among the festival’s highest overall award tallies, a company news release said.

Gold Dragon wins for Phoenix Ogilvy and Ogilvy Digital, together with the seven additional recognitions across multiple categories, highlighted Ogilvy’s ability to combine creativity, strategic thinking and commercial effectiveness to deliver business results.

Organised by the 4As Sri Lanka, the third edition of Dragons of Sri Lanka shortlisted more than 50 agencies and corporates, making it one of the country’s most competitive marketing communications awards. These local awards, along with the chapters in Malaysia and Pakistan are part of the Dragons of Asia platform, one of the region’s leading programmes for marketing communications effectiveness, with entries being judged on strategy, originality, execution and measurable results.

Ogilvy Digital accounted for eight awards in total, including a Gold Dragon in the Business & Trade Marketing category, and a Silver Dragon in the Innovative Idea or Concept category. The Agency additionally received six Black Dragons across the categories of Innovative Idea or Concept, Business & Trade Marketing, Content Creation, Small Budget, Event or Experiential, and Brand Trial or Sales Generation.

Commenting on the achievement, Sajith Weerasinghe, Chief Operating Officer of Ogilvy Digital, said, “These recognitions reflect the breadth of capabilities we’ve built across strategy, creative, content, experience design, technology and performance marketing. The fact that the work was recognised across so many different disciplines demonstrates our ability to apply creativity to a wide range of business challenges and objectives. We’re proud that this achievement spans multiple clients, categories and types of work, reflecting both the versatility of our people and our commitment to delivering results.”

The Ogilvy Group’s second Gold Dragon win was Phoenix Ogilvy’s recognition in the Product Launch or Re-Launch category for the relaunch of American Premium Water. It was a multi-dimensional campaign which refreshed the identity and rejuvenated the positioning of one of Sri Lanka’s pioneering bottled drinking water brands, bolstering its 30-year heritage while connecting with a new generation of consumers.

Commenting on the win, Siddhartha Roy, Chief Operating Officer at Phoenix Ogilvy, said, “There’s always something special about reimagining a brand with a rich heritage. American Premium Water has been a trusted name in Sri Lanka for more than three decades, but the challenge was to make it relevant and compelling for a new generation of consumers. We created a new blueprint for growth for the brand’s positioning, proposition and visual identity, and manifested it through design, packaging and storytelling. To see that transformation recognised with a Gold Dragon, and more importantly reflected in the brand’s renewed momentum in the market, makes this a particularly rewarding achievement.”

The Ogilvy Group Sri Lanka operates across multiple marketing communication disciplines and comprises over 290 staff in creative, strategy, digital, media, public relations and integrated communications. As part of the global Ogilvy network, the Group partners with leading local and international brands to create integrated campaigns that build brands, influence behaviour and drive business growth.

Business

Musical tribute to Fr. Marcelline Jayakody held in California

Published

14 hours ago

2026/09/6

Thilina Walpola

Rev. Fr. Rashmi M. Fernando with the performers at the event

A musical tribute celebrating the life and legacy of Rev. Fr. Marcelline Jayakody, OMI, renowned for his contribution to Sri Lankan arts, music, culture and religious harmony, was held in California with the participation of a large gathering of Sri Lankans.

Titled “Sri Lanka Rani Maniye,” the event was organised by the Sri Lankan Catholic Community in California (SLCCC) under the guidance of Rev. Fr. Rashmi M. Fernando, S.J.

Shalika Perera singing at the event

The programme honoured Fr. Jayakody, affectionately known as “Pansale Piyathuma” (The Priest of the Temple), for his efforts to promote Buddhist-Catholic understanding, interfaith dialogue and a shared Sri Lankan identity.

The event brought together members of the Maha Sangha, the Consul General of Sri Lanka in Los Angeles, musicians, singers, donors, parents, children and members of the Sri Lankan community from Los Angeles and other parts of Southern California.

Music, song and Sri Lankan cultural traditions featured prominently, with organisers placing particular emphasis on introducing the country’s artistic and cultural heritage to younger generations of Sri Lankans growing up overseas.

The programme also highlighted the importance of community unity, religious harmony and mutual respect among Sri Lankans living abroad.

Rev. Fr. Fernando told the gathering that the event marked only the beginning of efforts that could achieve more through unity “for the pride and greater good of our motherland, Sri Lanka.”

The organisers thanked the performers, volunteers, donors and well-wishers who contributed to the event, which concluded as a celebration of Fr. Jayakody’s enduring cultural legacy and the Sri Lankan diaspora’s continuing connection with its homeland.

Business

Hayleys Fentons completes Rs. 1 bn manufacturing facility in Wathupitiwala

Published

14 hours ago

2026/09/6

Thilina Walpola

Hayleys Fentons Limited has completed construction of a state-of-the-art manufacturing facility for Shield Restraint Systems (Pvt) Ltd at the Wathupitiwala Export Processing Zone, with the project completed on schedule within approximately 14 months.

The project, valued at more than Rs. 1 billion, commenced with the laying of the foundation stone on January 7, 2025. It was undertaken by the project arm of Hayleys Fentons, with Design Consortium International (Pvt) Ltd serving as the principal design consultant.

The facility has been designed to meet international industry standards and incorporates advanced safety and energy-efficiency features. A pre-engineered building structural system was used to facilitate faster construction and optimise project costs.

The new facility will manufacture safety restraint systems for the international automotive industry through Shield Restraint Systems.

Hayleys Fentons Deputy Managing Director – Projects Sujith De Alwis said the timely completion of the project demonstrated the company’s engineering and project management capabilities and the ability of Sri Lankan construction expertise to meet stringent international standards.

Hayleys Mobility Executive Director Roshani Dharmaratne said the project required detailed planning, quality management and coordination across multiple disciplines.

Sujith De Alwis, Deputy Managing Director – Projects of Hayleys Fentons Limited and Roshani Dharmaratne, Executive Director of Hayleys Mobility Limited

Chairman Design Consortium Migara Alwis said the project further strengthens its portfolio in specialised industrial construction and supports investment linked to Sri Lanka’s participation in the global automotive supply chain.