The Sri Lankan rupee slipped further this month, making it the weakest currency across Asia, according to Deputy Minister of Finance Anil Jayantha Fernando. He told reporters that speculative bets on additional depreciation have amplified the slide. Traders cite limited foreign‑exchange reserves and lingering fiscal strain as drivers, leaving importers and borrowers scrambling for costlier dollars. The central bank intervenes cautiously, amid rising inflation pressures.

Currency markets reacted sharply, with the rupee trading at a discount to the U.S. dollar that eclipsed regional peers. Asia’s worst performing currency label underscores investor wariness, as the island nation continues to negotiate debt restructuring with international creditors. Analysts warn a breach could force bond restructuring, prompting banks to tighten credit lines.

Businesses that rely on imported fuel or raw materials now face higher input costs, squeezing profit margins. Export‑oriented firms may see modest relief if a weaker rupee improves price competitiveness abroad, but volatile exchange rates complicate forward planning. Speculation‑driven slide therefore adds pressure to an economy already coping with tight liquidity and a fragile fiscal outlook. SMEs, which dominate the economy, feel the pinch.