Skip to content
Search

Latest Stories

Sri Lanka currency falls sharply as economic crisis deepens

Sri Lanka currency falls sharply as economic crisis deepens

THE SRI LANKAN rupee fell sharply against the dollar on Thursday (10), after the country's central bank ordered a 15 per cent depreciation in a bid to stave off a looming economic collapse sparked by a shortage of foreign currency.

The country's worst economic crisis since independence has led to fuel and electricity rationing across the south Asian nation of 22 million, crippling public transport and causing long queues for food and medicine.

The coronavirus pandemic battered the island's tourism sector - a key foreign currency earner - sparking fears the country may not be able to repay its $51 billion (£38.78 bn) foreign debt.

Traders said the rupee on Thursday (10) sank 11.53 per cent against the US dollar, the island's main foreign trading currency, as authorities struggled to raise cash to finance desperately-needed oil imports.

The state-run Ceylon Petroleum Corporation (CPC) has asked the government to urgently raise the retail price of oil in a bid to save itself from bankruptcy.

This week's depreciation added another $760 million (£577.91m) to service the firm's foreign debt of $3.3 bn (£2.51 bn), official figures showed.

The Central Bank of Sri Lanka on Monday (7) night announced it would allow "greater flexibility" in the exchange rate, which had been pegged at 197 rupees to the dollar since last April.

But it then backtracked, telling commercial banks that it would not intervene to shore up the rupee.

The remarks led to a sharp depreciation when markets opened on Thursday (10), traders said, with exporters expecting a further fall in the currency's value.

The CPC is losing 120 rupees (40p) on every litre of diesel sold at the current government-regulated price, chief Sumith Wijesinghe said.

"If we had the authority to increase (the price), we would have done it already," Wijesinghe told reporters.

The government has said it hopes to soon import $500m (£380.2m) worth of oil under a credit line from India to address the local shortages.

On Wednesday (9), the government tightened restrictions on a wide range of imports - from whisky to kitchen appliances - to save foreign exchange and finance essential imports such as oil, food and medicines.

An import ban was already introduced in March 2020 on big-ticket items such as cars, in an effort to stop the outflow of dollars needed to pay Sri Lanka's debts.

Milk powder, sugar, lentils and wheat, as well as medicine, are in short supply.

The International Monetary Fund last week urged Colombo to devalue its currency and raise taxes, warning the cash-strapped country that its foreign debt was "unsustainable".

(AFP)

More For You

UK business district
The Canary Wharf business district including global financial institutions in London.
Getty Images

Economy grew 0.7 per cent in Q1 2025, fastest in a year

THE UK economy expanded at its fastest pace in a year during the first quarter of 2025, driven by a rise in home purchases ahead of a tax deadline and higher manufacturing output before the introduction of new US import tariffs.

Gross domestic product rose by 0.7 per cent in the January-to-March period, the Office for National Statistics (ONS) said, confirming its earlier estimate. This was the strongest quarterly growth since the first quarter of 2024.

Keep ReadingShow less
Rosneft in early talks to sell India refinery stake to Reliance

Reliance Industries chairman Mukesh Ambani (Photo: Getty Images)

Rosneft in early talks to sell India refinery stake to Reliance

RUSSIAN oil major PJSC Rosneft Oil Company is in early discussions with Reliance Industries to sell its 49.13 per cent stake in Nayara Energy, an Indian energy company that operates a 20-million-tonnes-per-year oil refinery and 6,750 petrol pumps, sources familiar with the matter said.

The deal, if finalised, would see Reliance overtake state-owned Indian Oil Corporation (IOC) to become India’s largest oil refiner. It would also provide Reliance with a significant expansion in fuel retailing, where it currently holds a relatively small presence.

Keep ReadingShow less
modi-trump-getty
Trump shakes hands with Modi during a joint press conference at Hyderabad House in New Delhi on February 25, 2020. (Photo: Getty Images)
Getty Images

Key issues in India, US trade talks

TRADE talks between India and the US have hit a roadblock over disagreements on duties for auto components, steel and farm goods, Indian government sources said to Reuters, dashing hopes of reaching an interim deal ahead of president Donald Trump's July 9 deadline to impose reciprocal tariffs.

Here are the key issues at play:

Keep ReadingShow less
Anil Agarwal

Vedanta Resources, which is based in the UK and owned by Indian billionaire Anil Agarwal, has been working on reducing its debt. (Photo credit: Getty Images)

Getty Images

Anil Agarwal’s Vedanta Resources signs £438 million refinancing deal

VEDANTA LTD said on Thursday that its parent company, Vedanta Resources, has signed a loan facility agreement worth up to £438 million with international banks to refinance existing debt.

The refinancing move, where old loans are replaced by new ones, often at better terms like lower interest rates, has led ratings agencies such as S&P Global Ratings and Moody's to upgrade their outlook on the company this year.

Keep ReadingShow less
Trump-Getty

Trump said that while deals are being made with some countries, others may face tariffs.

Getty Images

Trump says major trade deal with India may be finalised soon

US PRESIDENT Donald Trump on Friday said a "very big" trade deal could be finalised with India, suggesting significant movement in the ongoing negotiations between the two countries.

“We are having some great deals. We have one coming up, maybe with India. Very big one. Where we're going to open up India," Trump said at the “Big Beautiful Bill” event at the White House.

Keep ReadingShow less