Exchange to overshoot until stability is achieved

There is likely to be continued volatility on the exchange rate level for limited time periods, over the next few months due to uncertainties on the economic and political fronts.

Accordingly, we believe LKR to further depreciate and hover in a wide range by June 2022.

Based on the clarity on the country’s economic progress in the midst of debt restructuring and IMF negotiations, foreign inflows are gradually expected to flow into the country supporting a gradual appreciation by December 2022.