LKR Holds Steady Amid Middle East Tensions as CBSL Bolsters Reserves 📈

• Currency Performance: The Sri Lankan Rupee (LKR) depreciated by 1.3% overall in early 2026. Despite a 1.6% dip following the Middle East conflict, it remains more resilient than regional peers like the Indian Rupee (-3.1%) and Thai Baht (-4.6%). • Central Bank Intervention: The CBSL maintained its role as a net buyer of foreign exchange, purchasing US$ 700 Mn during Jan-Feb 2026. Governor Dr. Nandalal Weerasinghe reaffirmed a flexible exchange rate policy, intervening only to manage "short-term volatility." • Reserve Position: Gross official reserves increased by US$ 500 Mn to reach US$ 7.3 Bn by the end of February 2026, providing a buffer against global energy supply shocks. • Regional Context: The LKR movement is currently in line with the Malaysian Ringgit (-1.6%) but has outperformed several South Asian and Southeast Asian currencies during the recent period of geopolitical instability.