In remarkable turnaround of events for the Sri Lankan rupee, respected financial news agency Bloomberg said the currency has surged against the dollar, snapping a nine-day losing streak to become Asia’s best-performing currency on Friday.

Bloomberg reported that the rupee strengthened as much as 2.7%, its biggest gain since March 2023, reversing losses from Thursday when it slid to a three-year low.

Data from the Central Bank of Sri Lanka (CBSL) show the extent of the panic that gripped Sri Lanka’s foreign exchange market last week, with the rupee’s year-to-date (YTD) depreciation against the US dollar accelerating sharply within days as importers rushed to secure dollars while exporters delayed conversions.

According to CBSL Weekly Economic Indicators data, the rupee’s YTD depreciation stood at 4.5% by 15 May before surging to 7.2% by 22 May, marking the sharpest deterioration in the currency so far this year.

The movement came amid heightened market anxiety over the economic fallout from the Middle East conflict and fears of rising global energy prices.

The rupee appreciated on Friday after the CBSL moved to calm a nervous foreign exchange market following sharp depreciation earlier in the week.

The Sri Lankan rupee has been identified as the worst-performing currency in Asia this month, according to a report published by a leading global business news platform.

The report stated that the Sri Lankan rupee had weakened significantly against the US dollar in recent days and warned that the currency could depreciate further.

Commenting on the situation, Professor Wasantha Athukorala of the Department of Economics and Statistics at the University of Peradeniya said the rapid depreciation of the rupee within a short period posed a serious risk to the country’s economy.

He warned that inflation could rise sharply in the future if urgent measures were not taken to control the situation.

Meanwhile, Member of Parliament Ravi Karunanayake claimed that the current government had no proper mechanism in place to prevent the rupee from depreciating further.

Former MP Piyal Nishantha also stated that both the government and opposition should work together to take immediate action to address the prevailing economic crisis.

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Sri Lanka expects nearly US$ 1 billion in foreign funding inflows in the near future, including around US$ 700 million in IMF-related support and nearly US$ 300 million from the World Bank and ADB, according to CB Governor Nandalal Weerasinghe.