Sri Lankan rupee ended slightly firmer at 176.20/30 per dollar on Monday, compared with Friday's close of 176.30/45, market sources said.
Analysts, however, expect the currency to weaken as money flows out of stocks and government securities.
The rupee fell 0.23% last week but is up 3.6% for the year. Exporters had converted dollars as investor confidence stabilised after a $1 billion sovereign bond was repaid in mid-January.
The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. Foreign investors bought a net 2.1 billion rupees worth of government securities in the week ended May 22, but the island nation saw a net foreign outflow of 19.1 billion rupees so far this year, central bank data showed.
Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds.
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