The rupee, which traded at 159.85 rupees per dollar during the day, ended steady at 159.75/85 per dollar from Thursday's close. It has fallen 4.04 percent so far this year and had hit a record low of 160.17 on June 20.

"Today we have seen some demand from foreign banks. There were sizable (inward) remittances today which helped absorb the pressure," said a currency dealer, asking not to be named.

Sri Lanka's central bank left its key policy rates unchanged on Friday before market hours, saying the decision backed its goals for stabilising inflation and fostering sustainable economic growth.

"Several emerging market currencies have depreciated over 4 percent, more than the Sri Lankan rupee, and if we reduce rates that would put further pressure on the exchange rate," Central Bank Governor Indrajit Coomaraswamy told reporters.

Sri Lanka has raised import duties on small hybrid cars by more than 50 percent, the government said on Wednesday, aiming to boost revenue and curb a sharp fall in the rupee.

The finance ministry imposed a minimum duty of 1.25 million Sri Lankan rupees on any hybrid car with an engine capacity of less than 1,000 cubic centimetres to discourage the imports which has pressurised the rupee currency.

Coomaraswamy had earlier said the rupee's decline was driven mainly by factors outside Sri Lanka.

Foreign investors sold government securities worth a net 4.6 billion rupees ($28.83 million) in the week ended July 25, bringing the outflow so far this year to 36.2 billion rupees, central bank data showed.