The government imposed new taxes on motor vehicles, telecoms, banks and liquor in a bid to boost revenues, in its 2018 budget outlined last week, as the budget deficit for the current year slipped to 5.2 percent of GDP.

The spot rupee closed at 153.63/65 per dollar, little weaker compared with Monday's close of 153.57/65.

"There was importer dollar demand in the latter part of the day. A state bank also tried to buy dollars for fuel imports. There was not much happening today and still banks are waiting for clarity on budget policies," a currency dealer said requesting anonymity.

Finance Minister Mangala Samaraweera announced on Wednesday tax concessions worth a monthly 1.5 billion rupees.

The rupee has slipped 2.6 percent so far this year.

Foreign investors had invested a net 19.1 billion rupees ($124.4 million) in equities this year as of Tuesday's close, and 44.3 billion rupees in government securities as of Nov. 8.