The rupee fell to an all-time low at 179.50 on the dollar,  compared with Wednesday's close at 178.70/179.20. Sri Lanka's markets were closed for a holiday on Thursday.

The rupee has fallen 16.8 percent so far this year, Refinitiv Eikon data showed.

Moody's downgraded Sri Lanka on Tuesday for the first time since it started rating the country in 2010, blaming the political crisis for aggravating already problematic finances.

The downgrade coincided with a decision by the International Monetary Fund to delay discussions on its loan tranche to Sri Lanka.

A bitter row over President Maithripala Sirisena's sacking of Prime Minister Ranil Wickremesinghe on Oct. 26 and the competing influences of China and India have shattered the island's fragile ruling coalition.