COLOMBO: The Sri Lankan rupee closed weaker on Tuesday as dollar demand from importers exceeded greenback selling by exporters, traders said.

The rupee, which traded at 159.95 per dollar during the day, closed at 159.90/160.00 per dollar, compared with Monday's close of 159.75/90. It has declined 4.2 percent so far this year.

"There was importer demand. But, the main reason is that there was not much of remittances or exporter flows," a currency dealer said.

Sri Lanka's central bank governor, Indrajit Coomaraswamy, had said earlier that the rupee's depreciation was driven mainly by external factors and that emerging-market currencies were under pressure.

The central bank is concerned about dollar hoarding and market manipulation that is exacerbating the rupee's weakness and has the tools to correct any misalignment in the exchange rate, Coomaraswamy told Reuters last week.

The International Monetary Fund (IMF) said last month that Sri Lanka's economy remained vulnerable to adverse shocks due to a sizeable public debt and large refinancing needs.

Dealers said the downward pressure on emerging market currencies was due to a rise in US interest rates and escalating trade tensions between China and the United States.

Spot rupee hit an all-time low of 160.17 per dollar on June 20.

A strengthening dollar since mid-April has increased the credit risk of several emerging markets, including Sri Lanka, ratings agency Moody's said late last month.

Foreign investors sold government securities worth a net 9.4 million rupees ($58,860) in the week ended July 11, bringing the outflows so far this year to 29.7 billion rupees, central bank data showed.