The rupee is the official currency of the Democratic Socialist Republic of Sri Lanka. It was introduced as a decimalised version of the Indian rupee, which was the previous official currency. The Sri Lankan rupee is subdivided into 100 cents, much like most dollar currencies. The current series of Sri Lankan banknotes holds the distinction of the being the only banknotes with one side printed in a vertical orientation rather than horizontally. The Central Bank of Sri Lanka is the sole issuing authority of the Sri Lankan rupee.
The first currency used in Sri Lanka, when the country was still known as Ceylon, was the Ceylonese rixdollar, which was replaced by the British pound sterling in 1825. The rixdollar was demonetised in 1831, leaving pound sterling notes the only official currency. However, in 1836, the Indian rupee coins began to be used alongside the British banknotes. For accounting purposes, two shillings were equal to one rupee, so 10 rupees could be exchanged for a pound. In 1869, the Indian rupee was made the official currency of Sri Lanka, replacing the pound sterling. When the rupee was decimalised in 1871, it became known as the Ceylon rupee and exchanged at a rate of 1 Ceylon rupee: 2 shillings 3 pence.
In 1948, Sri Lanka sought the help of the United States in setting up a central bank to replace the Currency Board. The Central Bank of Ceylon began operating in 1950, and it was renamed as the Central Bank of Sri Lanka in 1985. The objectives of the central bank are to stabilise domestic monetary value, preserve exchange rates, promote production and increase national income.
The modern economy of Sri Lanka evolved from a plantation economy that first developed in the 19th century. The country’s largest exports were tea, cinnamon and rubber. After World War II, Sri Lanka adopted a socialist economic policy, which nationalised most industries, but privatization recurred in 1977. In recent years, the country has seen a rise in a more diverse set of industries, including finance, telecommunications and textiles. Today, the Sri Lankan stock market is one of the top performing markets in the world, and the nation has the highest income per capita in South Asia although 14 percent of people live on less than A$1.15 per day. Although parts of Sri Lanka were devastated by the 2004 tsunami, tourism has greatly increased since 2009.