COLOMBO: The Sri Lankan rupee closed steady on Thursday in mild trading as dollar demand from importers were offset by greenback selling by exporters, traders said.

The rupee closed at 159.95/160.05 per dollar, largely unchanged from Wednesday's close. It has declined 4.2 percent so far this year and had hit a low of 160.17 on June 20.

"There was only mild importer dollar demand and exporter conversions were dull," a currency dealer said.

"We don't see any central bank intervention and the currency seems to be holding at these level."

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

The central bank is concerned dollar hoarding and market manipulation 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 said last month that Sri Lanka's economy remained vulnerable to adverse shocks due to a sizeable public debt and large refinancing needs.

Foreign investors sold government securities worth a net 9.4 million rupees ($58,787) in the week ended July 11, bringing the outflows so far this year to 29.7 billion rupees, central bank data showed.