📉 LMD-BCI Free Falls to 20-Month Low Amid Rupee and Fuel Pressures

Sri Lanka’s business sentiment plummeted in June 2026 as currency depreciation, fuel hikes, and geopolitical inflationary pressures hit corporate confidence. • Overall Business Sentiment: The LMD-PepperCube Business Confidence Index (BCI) dropped by 16 points to 132 in June (down from 148 in May). This marks its lowest level since October 2024 and sits 42 points below its 12-month average of 174. By comparison, the index stood at 210 in June last year. • Currency & Forex Market: The Sri Lankan Rupee depreciated by 7.8% against the US Dollar on a year-to-date basis as of 5 June. To manage foreign exchange demand, the Central Bank of Sri Lanka (CBSL) sold over US$ 223 Mn in the domestic forex market in May, while purchasing US$ 12 Mn. • Macroeconomic Outlook: Short-term inflation is projected to rise up to 7% (from 5.5% in May), driven by elevated energy prices and commodity volatility. However, BMI expects a rupee recovery by year-end due to tightening monetary policy and easing global oil prices. • Financial Reforms: On a positive note, the IMF approved a disbursement of US$ 695 Mn following the successful completion of the fifth and sixth reviews under the Extended Fund Facility (EFF). Firms remain highly cautious due to rising costs, exchange rate volatility, and political uncertainty, keeping near-term projections for the index subdued.