The Sri Lankan rupee is the official currency issued by the Central Bank of Sri Lanka. It has had to deal with fluctuating inflation rates throughout its history.
One rupee can be divided into 100 cents. Currently (Nov 2012) 100 rupees (Rs/SLR) are worth about €0.60. The rupee is available in coins (1, 2, 5, 10) as well as in bank notes (10, 20, 50, 100, 200, 1000, 2000, 5000). The fact that the highest available note is worth no more than €30 can make higher payments cumbersome. Cent coins exist but they are hardly used due to their negligible value.
ATMs are widely spread in Sri Lanka’s capital Colombo, other large cities like Kandy and the main tourist areas. Smaller cities should at least have one or two. If you are going to isolated places you should neither depend on finding an ATM there nor on the possibility of paying by credit card so take enough cash with you.
Many ATMs only distribute notes that are Rs500 or higher. You should make sure to have at least a few smaller ones since some shops and taxi drivers do not accept the bigger bank notes or simply do not give you change. There are different series of the money circulating so don’t be confused by the different pictures - stick to identifying the notes by their colours.
Credit cards are widely accepted in Colombo and the tourist centres, especially Visa or Mastercard. American Express and Diners Club are not as common. Best is to ask before buying something. Never let your credit card out of your sight as credit card fraud is reasonably common. You should also be careful when using an ATM with your credit card. Don’t let anybody watch you entering your PIN.
Most debit cards can be used to get money in Sri Lanka. Nevertheless you should talk to your bank first since many new European debit cards do not allow you to get money at ATMs outside of Europe anymore due to security reasons.
Another alternative to cash is travellers cheques. While international traveller cheques are not often accepted you can exchange valid ones in major post offices.