Sri Lanka’s rupee, after being Asia’s best-performing currency in H1 2023, has now become the worst-performing, declining over 6% this month. The rupee’s volatility is mainly due to interest rate cuts, easing import controls, and banks covering positions. As Sri Lanka lifted import controls on goods such as tiles and medical supplies, demand for USD increased. The central bank encourages businesses to use hedging instruments and make decisions based on inflation expectations rather than the exchange rate.