SriLanka, March 6 -- First Capital Holdings PLC in its latest Economic Outlook Amid the Iran Conflict forecasts that the Sri Lankan rupee could depreciate by around 5% during the year.

"However, given the increased external pressure and strain on the current account, there is a clear risk that the depreciation could exceed initial projections," the report said.

With escalating tensions in the Middle East, the US dollar has strengthened as global investors move toward safe haven assets.

"As of 3 March, the Dollar Index had risen sharply to around 99.20, up from the 97.60 range at which it had been hovering prior to the escalation, while the Sri Lankan rupee opened weaker but ultimately settled largely unchanged at 309.24, according to t...