The Sri Lankan rupee has been recognised as the best performing emerging market currency as of August 2024, showing an impressive spot return of 8.21%, according to Bloomberg market data. The rupee has held this title for five consecutive months, starting from March, making it the strongest emerging market currency so far this year.
In second place is the Malaysian Ringgit, with a spot return of 6.33%, followed by the African Rand with 3.05%. On the other hand, the Nigerian Naira and Egyptian Pound have been the worst-performing currencies in the first eight months of 2024, with negative returns of 42.73% and 36.46%, respectively.
First Capital projects that the Sri Lankan rupee will trade within the range of Rs. 295-305 per US dollar in the second half of 2024 and Rs. 305-315 in the first half of 2025. Factors like a slower economic recovery, election-related uncertainties, and fluctuating policy decisions are expected to influence exchange rates in the coming months.
The Central Bank of Sri Lanka reports a 5.6% year-on-year increase in export earnings for the first seven months of 2024, reaching $7,275 million. The growth was driven by sectors like petroleum products, food and beverages, tobacco, and tea. However, import expenditure also rose by 9.1%, reaching $10,419 million, due to higher imports of machinery, textiles, chemical products, and building materials.