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Diesel hit $5.12 a gallon this week. Most Americans shrug and blame the war. But diesel is not a personal inconvenience — it is the lifeblood of the entire US economy. Every truck, every train, every cargo ship runs on it. When it costs more, everything costs more. This is the story GasBuddy is quietly tracking — and why it may be the most important app open on your phone right now.
Energy & Consumer Economy AnalysisSL Economy NowMarch 28, 2026
The 2026 Fuel Crisis — At a Glance
Diesel (National Average)
$5.12 / gal
Up $0.61 in three weeks — the fastest single-month diesel spike since the 2022 Ukraine war shock
Regular Gasoline
$4.18 / gal
Rising — but lagging well behind diesel. The gap between the two is the "invisible inflation tax"
Diesel–Gas Spread
$0.94 / gal
Nearly $1 more for diesel than gasoline — the level at which freight cost hikes force retail price increases
GasBuddy Stations Tracked
150,000+
Real-time crowd-sourced prices across the US and Canada — the largest fuel price database on earth
Note: Fuel price figures represent national averages as of March 28, 2026 sourced from GasBuddy and the US Energy Information Administration. Regional prices vary significantly. This is economic commentary, not financial advice.
Chapter 01 — The Modern Utility
What GasBuddy Actually Is in 2026
Most people remember GasBuddy as the app their dad used to find cheaper gas on road trips. In 2026, that description is like calling the iPhone "a device for making phone calls." GasBuddy has evolved into one of the most powerful real-time economic intelligence tools available to ordinary Americans — a crowd-sourced, AI-enhanced platform that tracks fuel prices at more than 150,000 stations across the United States and Canada, updated by millions of users in near real-time, every single day.
In a stable economy, a 20-cent price difference between two stations is a minor convenience — worth a quick detour to save $3 on a fill-up. In the volatile war economy of 2026, that same 20-cent gap is the difference between a profitable delivery run and a loss for an independent trucker. It is the margin between a restaurant keeping its prices stable and being forced to pass another cost increase to customers. It is, for millions of American small businesses, a survival tool disguised as a consumer app.
Understanding what GasBuddy tracks — and more importantly, why those numbers move the way they do — is understanding the actual engine of American inflation in 2026. And the engine is running dangerously hot.
⛽ GasBuddy National Average PricesMarch 28, 2026 · Updated Hourly
Regular Unleaded
$4.18
▲ +$0.32 vs. Feb 2026
Personal vehicles. High — but consumers are absorbing it. The number people complain about but can survive.
⚠ Diesel — The Economy's Fuel
$5.12
▲ +$0.61 in 3 weeks
Trucks, trains, ships, generators. The price nobody talks about — but everyone pays at the grocery store.
Premium Unleaded
$4.74
▲ +$0.29 vs. Feb 2026
Luxury vehicles. High but not the critical number for economic analysis of inflation transmission.
GasBuddy Best Nearby Price
$3.84
▼ $0.34 below average
The GasBuddy advantage — users who check the app consistently pay 15–34 cents below the corner station.
Critical Spread: Diesel Premium Over Regular Gasoline
When this gap widens, freight costs rise and everything shipped by truck becomes more expensive within 6–8 weeks
+$0.94 / gallon
Chapter 02 — The Iran Factor
The Strait of Hormuz & the $5 Diesel Crisis
To understand why diesel jumped 61 cents in three weeks, you need to understand one geographical fact: 21% of the world's total oil supply passes through a narrow waterway between Iran and Oman called the Strait of Hormuz. At its narrowest point, it is just 21 miles wide. Iran has the military capability to disrupt — and has been actively restricting — the flow of tanker traffic through this strait since the conflict escalated in early 2026.
Oil Through Hormuz Daily
21M bbl
Barrels of oil transiting the Strait of Hormuz every day — 21% of global supply squeezed through 21 miles
WTI Crude Since Escalation
+32%
Oil price increase since the Iran conflict began restricting Hormuz shipping lanes
Diesel vs. Gasoline Spike Rate
3× Faster
Diesel has risen 3x faster than regular gasoline since the conflict began — structural, not coincidental
Weeks Until Grocery Impact
6–8 Wks
The "pipeline lag" — March's diesel spike reaches supermarket shelves in May 2026
Why Diesel Spikes Faster Than Gasoline
Diesel Is the "Heavy" Fraction — Most Sensitive to Supply Disruption
Diesel is produced from the heavier "middle distillates" of crude oil — the same fractions used for heating oil and jet fuel. These fractions are in higher global demand during geopolitical crises (military operations run on diesel and jet fuel), have less refining flexibility than gasoline, and are more directly tied to the crude quality disrupted by Hormuz tanker restrictions. A crude oil shock hits diesel first, hardest, and longest. This is why the diesel price jumped 61 cents while gasoline rose only 32 cents in the same period. It is not random. It is chemistry and geopolitics combining into your fuel bill.
Chapter 03 — The Hidden Tax
Why Diesel Hurts You More Than Gasoline
Here is the economic insight that most news coverage misses entirely: you feel the gasoline price because you stand at the pump and pay it directly. You feel the diesel price in every single price tag at every single store — but you never see the connection. The diesel price is a hidden tax on every American family, buried inside the cost of everything they buy.
Diesel is the fuel of commerce. It powers the 18-wheelers that deliver to supermarkets, the refrigerated trucks that carry produce, the freight trains that move raw materials, the construction equipment that builds homes, the farm equipment that harvests food, and the backup generators that keep warehouses running. When diesel rises by $1 per gallon, the cost ripples through the entire supply chain — touching every product, every service, every meal.
You don't pay diesel at the pump. You pay it at the grocery store, the hardware store, and every restaurant menu.
— The mechanism of diesel-driven inflation in 2026
The Supply Chain Multiplier — One Six-Pack, Five Diesel Costs
To make the abstract concrete, trace the journey of a single six-pack of beer from grain field to your refrigerator. At every single step, diesel is the engine. At every step, higher diesel adds cost. And at every step, that cost is passed forward — ultimately to you.
Step 01 — The Farm
Barley Harvest & Grain Transport
Farm equipment — combines, tractors — runs on diesel. At $5.12/gallon, a large grain farm spends $40,000–$80,000 more per season than at $3.50 diesel. That extra cost is passed to the brewer in the price of barley.
Adds: +$0.04–$0.08 per six-pack
Step 02 — Raw Materials
CO₂, Hops & Packaging Delivery
Every ingredient arrives at the brewery by truck. CO₂ for carbonation, hops, aluminum cans, glass bottles — all delivered with diesel fuel surcharges added. There is no ingredient in a beer can that did not arrive by diesel-powered transport.
Adds: +$0.05–$0.10 per six-pack
Step 03 — The Brewery
Production Energy Costs
Brewing, refrigeration, and packaging require enormous energy. Backup generators run on diesel. Brewery energy costs have risen 18–22% since the Iran conflict began — passed directly into the wholesale price of every case shipped.
Adds: +$0.06–$0.12 per six-pack
Step 04 — Distribution
Refrigerated Trucks: Brewery → Store
The finished beer travels brewery → regional distributor → retail stores in refrigerated diesel trucks. Distributors add a fuel surcharge to every delivery when diesel crosses $4.50. At $5.12, that surcharge is standard and non-negotiable across the entire industry.
Adds: +$0.08–$0.15 per six-pack
Step 05 — The Store
Retail Overhead & Margin Recovery
The supermarket pays higher delivery costs on every product in the store simultaneously. To protect its margins, it raises prices across the board. The beer price rises — not just because beer got more expensive, but because the store's total cost base rose across bread, produce, cleaning products, and everything else.
Total impact: +$0.35–$0.65 per six-pack
The Feedback Loop
Higher Prices → Lower Demand → Slowdown
As prices rise across all consumer goods, households cut back. Lower consumer demand reduces orders. Fewer orders mean fewer trucking runs. Fewer runs mean the independent trucker's fixed costs are spread over less revenue. The economy slows in a diesel-driven spiral that GasBuddy's demand data is already beginning to detect.
Watch: GasBuddy demand pullback signal
Chapter 04 — The Great Trucking Divide
Big Firms vs. Independent Drivers
The $5 diesel crisis is not hitting all trucking equally. It is creating a structural divide in American logistics that is quietly reshaping who controls the movement of goods — and what that means for prices, competition, and the livelihoods of hundreds of thousands of independent owner-operators who built America's supply chain.
Mega-Carriers & Corporate Fleets
Big Trucking — Adapting & Surviving
▸Fuel hedging contracts: Major carriers like J.B. Hunt, Werner, and Schneider lock in diesel prices months in advance through futures contracts — shielding them from spot-price spikes entirely.
▸Automatic surcharge pass-throughs: Large carriers have standard contracts with automatic fuel surcharge escalators. When diesel rises, the cost is legally passed to shippers within days — no negotiation required.
▸Fleet electrification: The largest carriers are accelerating EV truck adoption, partially insulating their long-term cost structure from diesel price volatility entirely.
▸Scale efficiency: 5,000+ trucks enable route optimisation, load consolidation, and backhaul filling that dramatically reduces cost-per-mile versus a solo operator.
Status: Adapting & Profitable
Independent Owner-Operators
"King of the Road" — Under Siege
▸No hedging power: A single-truck owner cannot access futures markets. They pay the full spot price at the pump — every fill, every run, with zero protection from price spikes.
▸Fixed costs don't flex: Truck loan payments, insurance, licensing, and maintenance are fixed regardless of fuel prices or freight rates. When diesel rises and rates don't follow, margins collapse fast.
▸Freight rate lag: Spot freight rates have not risen as fast as diesel. Independent drivers are effectively subsidising shipper fuel costs out of their own shrinking margins.
▸GasBuddy is now survival infrastructure: Many independent truckers run GasBuddy Pro to plot routes through cheaper-fuel states, saving $80–$150 per fill cycle — often the only margin left in the run.
Status: Margin Crisis — Many Exiting the Market
The Independent Trucker's Economics — Chicago to Los Angeles Run, March 2026
Distance & average fuel efficiency2,017 miles · 6.5 mpg loaded
Diesel required per run310 gallons
Fuel cost at $3.50/gal (pre-crisis baseline)$1,085 per run
Fuel cost at $5.12/gal (today)$1,587 per run
Extra fuel cost per run+$502 per run
Extra annual fuel cost (200 runs per year)+$100,400 per year more
GasBuddy Pro route optimisation savings (est.)$8,000–$15,000 per year recovered
Net additional annual burden (after GasBuddy savings)~$88,000 per year above 2023 costs
Chapter 05 — The App in Detail
GasBuddy's Six Features That Matter Most in 2026
GasBuddy is free. GasBuddy Pro costs $9.99/month. For an independent trucker or a small business with a delivery fleet, the Pro features alone can pay back the subscription cost on the first fill-up of the month. Here is exactly what the platform offers — and why each feature matters in the current environment.
01
Core Feature · Free
Real-Time Price Map
The original GasBuddy function, now dramatically more powerful. A live map showing current prices at every station within your search radius, updated by the community in real time. In a market where the gap between the cheapest and most expensive station in a metro area regularly exceeds 60–80 cents, this feature alone saves the average American driver $150–$300 per year. For commercial drivers filling 200+ gallons at a time, the savings multiply with every stop.
02
Strategic Routing Tool · Pro
Price Heat Maps by State
GasBuddy's heat maps show fuel price averages by state — allowing truckers to make strategic fill decisions based on where they are headed. In 2026, diesel in California averages $6.08/gallon versus $4.71 in Texas. A trucker who times a fill in Texas rather than California saves $0.97 per gallon — on a 200-gallon fill, that is $194 saved in a single stop. Across a year of runs, this is a $15,000–$25,000 annual advantage that requires zero change to their route or schedule.
03
Emergency Planning · Free
Outage & Shortage Tracker
During supply disruptions — pipeline failures, hurricane-related refinery shutdowns, or war-related import restrictions — GasBuddy's outage tracker shows in real time which stations are out of fuel and which have supply. In 2020, this became essential during COVID panic-buying. In 2022 it tracked the Colonial Pipeline shortage. In 2026, with Gulf Coast refinery capacity under periodic stress, the outage map is increasingly a daily operational tool for fleet managers and emergency planners.
04
Savings Tool · Free with Activation
GasBuddy Pay Card — 25¢ Off Every Gallon
GasBuddy's Pay card gives an automatic 25 cents per gallon discount at participating stations, linked directly to your bank account. For a consumer filling a 15-gallon tank twice a month, that is $90 per year in direct savings with zero behavioural change. For a small business with three company vehicles, it easily exceeds $1,000 per year. In 2026, with fuel costs straining small business margins, this is cash most businesses did not know they were leaving on the table.
05
Economic Intelligence · Research Grade
Demand Tracking — The Recession Early Warning
GasBuddy's least-known but arguably most important feature — for economists and investors watching the macro picture. GasBuddy's aggregate demand data shows, in near real time, whether Americans are pulling back on fuel consumption. When demand drops while prices are high, it signals that consumers are cutting discretionary driving — one of the most reliable leading indicators of an approaching recession. The Federal Reserve and major investment banks monitor GasBuddy's weekly demand reports specifically for this signal. In 2026, the data shows demand running 4.2% below year-ago levels — a canary in the economic coal mine.
06
Fleet Management · Enterprise
GasBuddy Business — Fleet Fuel Intelligence
For businesses with vehicle fleets — delivery services, contractors, field service companies — GasBuddy Business provides a dashboard that tracks every fill-up, monitors driver behaviour, flags overspending, and recommends optimal fill locations along planned routes. Companies using GasBuddy Business report saving 12–18% on fleet fuel costs with no change in operations. At $5.12 diesel, a 15% saving on a 10-truck fleet is $45,000+ per year in recovered margin — from an app subscription that costs less than a single tank of diesel per month.
Chapter 06 — What Economists Read
The GasBuddy Macro Signal: What the Data Says Now
GasBuddy is not just a consumer tool. It is one of the most granular, real-time economic datasets available anywhere — and it is being used at the highest levels of economic policy analysis. Here is what the data is currently telling those who know how to read it.
📉
Demand Pullback Signal
US fuel demand is running 4.2% below the same period last year — despite the economy still technically growing. When demand falls while prices rise, consumers and businesses are actively cutting back. This is the early-warning pattern that preceded both the 2008 and 2020 recessions by several months.
Watch: Recession Leading Indicator
🗺
State Price Divergence
GasBuddy heat maps show California diesel at 96 cents above the national average. This creates a compounding competitive disadvantage for California businesses that worsens with every price spike — a structural economic problem visible in GasBuddy's data years before it shows up in official economic statistics.
Risk: Business Migration Accelerating
🔁
Inflation Transmission Speed
Economists use GasBuddy's daily data to calculate how quickly oil shocks transmit into retail fuel prices — and then model when those fuel costs appear in grocery CPI. The current Hormuz shock took 11 days to reach the pump. Grocery effects are expected 6–8 weeks later. March's diesel spike hits supermarkets in May.
Alert: Grocery Wave Expected May 2026
🏦
Federal Reserve Input
The Fed's regional banks monitor GasBuddy data to track energy-driven inflation at the consumer level. The current pattern — sustained price spikes with falling demand — is the signature of stagflation risk: rising prices alongside economic slowdown. This is the Fed's most feared scenario because it leaves them with no good options.
Signal: Stagflation Pattern Emerging
State / Region
Regular Gas
Diesel
vs. Nat'l Avg
Best GasBuddy Price
State Gas Tax
🌴 California
$5.14
$6.08
+$0.96 above
$4.67
68.15¢/gal
🌲 Pacific Northwest
$4.72
$5.56
+$0.44 above
$4.31
49.4¢/gal
🗽 New York / Northeast
$4.44
$5.38
+$0.26 above
$3.99 (NJ)
44.4¢/gal
🌽 Midwest (IL/IN/OH)
$4.11
$5.04
≈ National avg
$3.82
39.2¢/gal
🏜 Arizona / Southwest
$3.94
$4.89
-$0.23 below
$3.71
18¢/gal
🌵 Texas / Gulf Coast
$3.87
$4.71
-$0.41 below
$3.64
20¢/gal
The GasBuddy Strategic Play
California vs. Texas: $1.37/Gallon Diesel Difference
The diesel gap between California ($6.08) and Texas ($4.71) represents a $1.37 per gallon arbitrage for any trucker who times their fills strategically. On a 200-gallon fill, that is $274 saved in a single stop. Interstate truckers running the I-10 corridor between Los Angeles and Houston who use GasBuddy to optimise fills report saving $12,000–$20,000 per year on fuel alone — entirely from knowing when and where to stop. GasBuddy Pro subscriptions in the trucking industry have increased 340% since the Iran crisis began.
📘 TheDailySatisfier — Facebook Shareable Summary
Why is your grocery bill so high? Look at the diesel pump. ⛽
With the Strait of Hormuz under pressure and $5.12 diesel hitting American pumps this week, every truck, every delivery, every shelf in every store just got more expensive. That is not gasoline — that is diesel. The fuel you never buy directly, but pay for every single day in your grocery cart. Big trucking firms are surviving with fuel hedges and automatic surcharge clauses. But the independent "King of the Road" — the owner-operator who built this country's supply chain — is being squeezed out one fill-up at a time. Is this the end of the small trucking business? And the grocery inflation wave from March's diesel spike hasn't even arrived yet. It's coming in May. Are you ready?
The Infinity Knowledge Takeaway
In 2026, GasBuddy is not an app for finding cheap gas. It is a real-time window into the geopolitical cost of war — a crowd-sourced economic dashboard tracking the exact point where an international conflict becomes a line-item on your grocery receipt. The 150,000 stations it monitors are not just data points. They are the pulse of the American economy, beating faster or slower depending on what is happening 7,000 miles away in the Persian Gulf.
The spread between gasoline and diesel — currently 94 cents and widening — is the single most important number in the US consumer economy right now. It is more predictive of next month's inflation than any Federal Reserve statement. It is more honest about supply chain stress than any corporate earnings report. And it is visible, in real time, to anyone willing to open GasBuddy and look.
As long as the Middle East remains a flashpoint and the Strait of Hormuz remains under pressure, diesel will trade at a premium that punishes every American small business, every independent trucker, and every family at the supermarket — regardless of whether they ever stand at a diesel pump themselves. The GasBuddy number is the most democratic economic indicator in America. It does not spin. It does not forecast. It just shows you the price — and right now, the price is telling a very uncomfortable story about the cost of a world that still runs on fossil fuels, and a war that shows no sign of ending.
The exchange rate is a rate of exchanging a unit of foreign currency with the domestic currency unit. Depreciation and devaluation are two different concepts. Depreciation is the adjustment of the exchange rate so that more of yours currency is needed to exchange for a unit of foreign currency (Bandara, 2007) Devaluation is the different concept from depreciation. Devaluation is decreased the value of the particular currency under the fixed exchange rate. The Opposite side of the devaluation is considered as revaluation
Managed floating rate system
Managed floating is a concept that lies between fixed exchange rate system and floating exchange rate system. It avoids both appreciation and depreciation of the exchange rate by selling and buying the domestic currencies in foreign exchange market to control the fluctuations in the exchange rate. It is not the clean float and basically it is decided based on the control of the central bank in foreign market unless demand and supply of the market. It is a combination of favorable features of both fixed exchange rate system and free floating system. According to that, central bank intervenes to control the fluctuation of exchange rate in the short run, while it is decided based on the demand and supply in the long run. It is implemented from 1977 to 2001.
Free-floating rate system
On 23 of January 2001, Sri Lanka shifted from managed floating system to free-floating exchange system. According to this central bank avoids from preannouncing the exchange rate. Instead of that CB intervenes in foreign exchange market by selling and buying foreign currency at or near market prices due to the strong need of maintaining a large stock of foreign reserves.
Evaluation of Sri Lankan Foreign Exchange rates after 1977
Managed floating exchange regime (1977-2000)
The dual exchange rate system was abolished in November 1977, and both rates, namely the official rate and premium rate, were unified at Rs 16 per US dollar. Unification of the exchange rate on November 16, 1977, resulted in a devaluation of the rupee by 44.6% against the US dollar and 45.5% against the pound with the purpose of export competitiveness. The rupee was devalued from 8.41 rupees per US dollar in 1977 to 15.61 rupees per US dollar in 1978. The massive devaluation of the rupee resulted in a sharp increase in the remittances sent by Sri Lankans living abroad. (Athukorala and Jayasuriya, 1994).The worker remittances increased from 190 million rupees in 1977 to 610 million rupees in 1978.
1977 introduced a managed floating system, and Central bank made a discussion with all other commercial banks and determines the future buying and selling rate based on the demand and supply of the foreign exchange rate. According to that decision, the exchange rates of six main currencies (Dollar, Pound, Mark, Frank, and Indian Rupees) and commercial bank have right to decide the exchange rate of other currencies based on the cross exchange rate. In November 1982, the Central bank made significant changes regarding the exchange rate. Such as cancelling the meeting which decided the buying and selling rate of exchange rate at the central bank and determined the buying and selling rate of only Dollars, Central bank limited the use of Dollar when in foreign transactions with the Commercial bank, commercial bank received right to determine the foreign exchange rate based on the demand and supply of the foreign currency. Purpose of the Central bank for the above changes is limited to intervention in the foreign exchange market. In 1990 Central bank of Sri Lanka stopped the preannouncing of buying and selling rate of US dollars. Instead of that, they introduced a daily system for deciding buying and selling rate at the beginning of transactions. Aims of presenting conventional operation are protecting the competitiveness of domestic export in the foreign market and giving a stable position for international trade. After July in 1997, there was some financial crisis, especially in the East Asian countries due that an unstable condition in foreign exchange market prevailed in those countries. Sri Lankan rupee is depreciated against US $ by 7.5% because of the impact to the price of the rubber production of Sri Lanka and industries like the garment industry and commodity export industries the revenue fell far below the expected targets. Also, financial hardship faced by South Korea, Malaysia, and Hong Kong a fall in foreign investment in Sri Lanka too, is expected. Depreciation of Sri Lankan rupee is relatively low when compared with the domestic currency of some of the countries in that region depreciated against the US Dollar. However as a south Asian country Sri Lanka was less affected during that period due to Capital transactions were limited since restrictions were imposed against the operations of capital account in balance of payment, favorable aspects of foreign assets, ability to bear the foreign debts and continuous depreciation of Sri Lankan Rupee under the managed floating rate system. Due to the above reasons, Sri Lanka was able to avoid the unfavorable effects from the decline of competitiveness of export and save a considerable amount of outflow of capital temporarily resulted for lower depreciation against US Dollar. In 2000, due to the rapid rises in petroleum prices and military expenditure resulted in increasing the deficit of the balance of payment and decline of foreign assets. (Appendix 1) Therefore Central bank had to amend the margin in exchange rate frequently. From 30 th June 2000, the margin of exchange rate extended from 2% to 5% and devalued the average amount by 4% to give flexibility to Sri Lankan rupee in the foreign exchange market. The margin of the exchange rate is extended in all time when depreciates the rupee value. It is difficult to maintain the managed floating exchange rate system since the continuous increase of the deficit of the balance of payment and further expectation of depreciation of Sri Lankan rupee. The balance of the payment problem of the country was not entirely solved by the rupee depreciation in 2000. Therefore there is a need for a new exchange rate system.
Floating exchange rate regime (2001- up to now)
With the introduced of the floating exchange rate system has led to minimization of the probability of outflow of official foreign reserves. If the central bank followed the crawling band system further, it would have led to an unstable situation in exchange and financial market by out flowing the official foreign reserves. Because of the introduced of the free-floating exchange rate rupee is depreciated by 11.3% against the US dollar, by 8.8% against the sterling pound and 6.7% against Euro. Due to the introduction of the free-floating exchange system, there was a huge fluctuation in the financial market of Sri Lanka. Within few hours buying price of Dollar has moved from Rs 84.75 to Rs 85 and selling price of dollar shifted from Rs 85.25 to Rs 89. As a result of right of commercial bank to decide the exchange rate based on demand and supply there were a number of exchange rates for dollars and Sri Lankan Rupee at the same time. (Appendix 2).However Sri Lankan rupee has depreciated in few amounts when compare with the other countries. For Instance, in January 1999, there was a 40% of depreciation in Riyal on the first day of free-floating exchange. There was a 16% of depreciation in Indian rupees at the first day of floating exchange system. 31% for Korean won in 1997 and 28% for Sweden corner in 1992. (Ramasinghe, 2007). Even though there is depreciation in Sri Lankan Rupee in first two days after implementing the floating exchange system instantly it has appreciated in the third day. Reasons for the settlement of instability after introducing the floating exchange system are the following actions taken by the central bank. The beginning of the December in 2004, there was a huge fluctuation in exchange rate because of massive amount of deficit in the balance of payment. The exchange rate depreciated up to the rupee 105.47 per US dollar in 17th December. However due the expectation regarding the foreign aids receiving because of tsunami the exchange rate appreciate up to Rs 104.61 per US dollar in 31st December. In 2005 exchange rate is revalued up to the certain extent due to the foreign aids received because of tsunami. Country got the large no of foreign currency inflows and received the debt moratorium from the lenders. In 2010 the exchange rate was appreciated due the .The budget 2012 proposed to devalue the exchange rate by 3% bypassing the mandate of the Central bank of Sri Lanka. Soon after the CBSL stopped intervention to foreign exchange market and subsequently depreciated by 12% during the year 2012.
Replacing the fixed exchange rate with a managed floating exchange rate with the purpose of export-led growth in 1977. But that did not happen due to the two main reasons namely reasons related with exports and reasons related with budget deficit. Excessive budget deficit contracted domestic saving and ultimately it is impact for the balance of payment. When compare the Sri Lankan export with few South Asian and East Asian countries it can be noticed that there is a significant improvement in Bangladesh and Vietnam. (Appendix 3). Sri Lankan export sector has continued to rely on low value-added exports mainly garments. However, when compared with East Asian countries, they have utilized the export-led growth with the high-income category including technology, innovation, and science. They have changed their export commodity from agricultural product to human-computer interaction product. Also Sri Lanka missed the opportunity to engage in global product sharing. The main export of the Sri Lanka is textile and garment. When compare the clothing exports from 1980 to 2010 from South Asian countries in 1980 clothing exports contribution from Bangladesh and Sri Lanka was US $ 2 million and US $ 109 million respectively. However the Sri Lankan clothing exports in 2010 is lower than the Bangladesh. (Appendix4). When compare the textile export from 1980 to 2010 from south Asian countries it can be noticed that there is a considerable difference between Sri Lanka and Bangladesh.(Appendix 5). Bangladesh has become one of the leading exporters in the textile and garment industry shifting from non-value added (textile) to value-added exports (garment).these economic conditions resulted in expansion of trade deficits which necessitated continuous depreciation of the rupee.
Conclusion
There are two main exchanged regimes after 1977, namely managed floating exchange rate system and free-floating exchange rate system. Because of the various reasons most of the time rupee value is depreciated rather than appreciation. Even though there is a continuous depreciation of Sri Lankan rupee with the intention of export-led growth exports of Sri Lanka is still backward when compared with other South Asian and East Asian countries.