Dealers said the rupee was under pressure last week due to dollar demand from state-run Ceylon Petroleum Corp (CPC), which stocked up crude ahead of an expected fuel price hike.

The spot rupee ended at 153.55/65 per dollar, firmer from Friday's close of 153.65/75.

"The state bank which was buying dollars for CPC was not seen today and that is the main reason for rupee strengthening," said a currency dealer, who requested anonymity.

"There was exporter dollar sales today."

Crude prices are expected to rise in the country after private fuel retailer Lanka IOC informed local media it is likely to increase rates as they have been selling at a loss.

The rupee has been under pressure since January after the central bank stopped defending the currency and started buying the dollar to build the country's depleted foreign currency reserves.

The island nation has seen 20.2 billion Sri Lankan rupees of net inflows into equities this year, as of Monday's close, and 33.8 billion rupees into government securities as of Oct. 11, official data showed.