The spot rupee finished at 153.15/25 per dollar, compared with Monday's close of 153.10/15.

"There was demand from state banks, probably to pay oil bills and there is not much of selling," a currency dealer said, requesting anonymity.

"Slight (depreciation) pressure is there (on the rupee) with some import bills and some other outflows."

Dealers said there was no intervention from the central bank.

Sri Lanka's central bank is targeting a more flexible exchange rate regime, the government said last week in a document outlining its policies to the International Monetary Fund.

The central bank has intervened in the foreign exchange market since late February only to build up reserves or to stem excessive movements in the exchange rate, and will continue to do in the future as well, the document released by the IMF showed.

The banking regulator held its policy rates steady earlier in the month and said tightening measures are helping cool inflation and credit growth, signalling receding concerns about price pressure as it focuses on supporting an economy hit by extreme weather.