Thursday, July 23 2026
Thursday, July 23 2026
DEBASEMENT : Sri Lanka's inflation is now at 6.8 percent, higher than the central bank's 5 percent average level for two months after the rupee collapsed in the first quarter
MONETABRIEF – Sri Lanka's inflation rose to 6.8 percent in the 12-months to June 2026, measured by widely watched Colombo Consumer Price Index, up from 5.5 percent in May, data from the state debt office shows.
The CCPI Index rose 2.1 percent to 207.7 percent, exceeding the levels seen at the height of the last currency collapse.
Sri Lanka's rupee collapsed from around 300 to 335 with most of the collapse coming in March and April 2026, as the central bank printed money through swaps to cut rates, overbought dollars steadily depreciating the currency from around 300 to 309 to the US dollar until the Middle East war started.
The central bank then suddenly stopped defending the currency against the liquidity it had created (denied convertibility), triggering a bout of speculation and uncertainty.
The food sub-index rose 4.5 percent in the month.
Sri Lanka operates a so-called flexible exchange rate, which critics say is unpredictable operating framework which sows chaos whenever the central bank refuses to provide convertibility to money it prints.
In the past year money was mainly created by dollar purchases. The currency depreciates when the central bank refuses to redeem the notes for dollars.
The central bank raised rates by 100 basis points as the rupee collapsed and the forex markets were hamstrung by moral suasion.
Authorities have since been purchasing dollars around 334 rupees preventing appreciation and a return to earlier price levels. (Colombo/June30/2026)
| US Dollar | 340.98 | Sell - |
| Euro | 391.44 | Sell - |
| Japan Yen | 2.114 | Sell - |
| Sterling | 458.31 | Sell - |
| AED | 91.58 | Indi - |
| 3 month bill | 10.13 | .08 ▼ |
| 12-m bill | 10.20% | .01 ▼ |
| Gold | $4035 | - - |
| ASPI | 21,417.80 | 7.19 ▼ |
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