What Is the SLR—Sri Lankan Rupee (LKR)?
SLR is the commonly used currency abbreviation for the Sri Lankan rupee, although the international currency code for the SLR is LKR. It is the official currency of the Democratic Socialist Republic of Sri Lanka, which was known as Ceylon prior to 1972.
- The Sri Lankan rupee is commonly abbreviated SLR, although its actual currency code is LKR.
- Sri Lankan currency is managed by the central bank.
- Sri Lanka is a growing economy. Inflation is under control as of 2018 but has been high in the past.
Understanding SLR—Sri Lankan Rupee (LKR)
The Sri Lankan rupee is divisible into 100 cents. Sri Lankan currency in circulation includes one, two, five, 10, 25, and 50 cent coins, as well as one, two, five, and 10 rupee coins. Banknotes are available in denominations of 10, 20, 50, 100, 200, 500, 1,000, 2,000, and 5,000 rupees.
The Sri Lankan rupee frequently appears as the currency abbreviation SLR to avoid confusion with other rupees. The abbreviation for rupees is Rs.
History of the Sri Lankan Rupee (LKR)
The British pound (GBP) became the official currency in 1825. Prior to this period, the currency in use was the Ceylonese rixdollar, a currency used in parts of Europe and some Dutch colonies. One pound was exchanged for 11/3 rixdollars.
In 1836, the British declared the Indian rupee (INR) the official coin of the island nation, as it returned to the Indian currency area. In 1869, Ceylon (as Sri Lanka was referred to at that point), established the rupee as legal tender. The INR became the only legal tender for the island three years later. The country officially gained independence from the British in 1948 and established the Central Bank of Ceylon two years later.
Once the country was renamed to Sri Lanka, it officially adopted its own currency in 1972.
Sri Lankan Economy
Since gaining independence in 1948, the Sri Lankan economy has faced constant challenges from infighting by various ethnic groups vying for government control, Marxist insurrections, and prolonged civil war.
Gross domestic product (GDP) growth was 3.2% in 2018, and inflation was 4.3%, according to World Bank data. Actual GDP is $88.9 billion in 2018, up from $56.7 billion in 2010.
Sri Lanka was the world’s third-largest tea exporter in 2018, after China and Kenya. Other major exports include cinnamon, rubber, sugar and exotic woods such as teak, mahogany, and ironwood. Service and technology industries also contribute to the economy.
Role of the Central Bank
Sri Lankan officials placed a high priority on establishing a stable economic environment to maintain social and political order. The Monetary Law Act gives the central bank broad authority to implement monetary policy to obtain its objectives of economic and price stability. The Central Bank formulates and administers its monetary policy, and acts to influence the cost and availability of money. At present, the monetary policy framework of the country places greater reliance on market-based policy instruments and the use of market forces to achieve the desired objectives. It maintains a diligent watch over the supply of money and a vigorous campaign of shredding notes and replacing them as needed.
The Monetary Control Act also entrusts the central bank with designing, printing, and distributing Sri Lanka's banknotes and minting of coins. One of the unique and instantly recognizable features of Sri Lankan notes is the vertical printing on the reverse side. Other distinguishing features include cotton stock and raised textures for the visually impaired. Banknotes also feature watermarks, security threads, see-through images, ink shifting, and other security measures to combat counterfeiting.
Example of Converting Sri Lankan Rupees (LKR) into Other Currencies
Assume that it costs 181.26 SLR to buy one U.S. dollar (USD). This is a rate of USD/LKR 181.26. If the rate rises to 190, that means the rupee has lost value, since it now costs more LKR to buy one USD. If the rate were to fall to 170, the LKR would have appreciated since it now costs fewer rupees to buy one USD.
To find out how many U.S. dollars can be bought with one LKR, divide one by the USD/LKR rate. This will provide the LKR/USD rate (notice the codes are flipped) of 0.0055. That means a Sri Lankan rupee will buy about half a cent U.S.