The rupee forwards were active, with two-week forwards closing at 153.10/20 per dollar, hardly changed from Friday's close of 153.10/25.

It fell to 153.40/45 in early trade.

"We expect the rupee to be in this range during this week, and to appreciate once the IMF announces its third tranche and the inflows from the government's sovereign bond issue," said one currency dealer.

The IMF is yet to approve the third tranche of a $1.5-billion loan, and the market expects the approval to help boost sentiment. Finance Minister Ravi Karunanayake met IMF officials in Washington last week.

Government officials have said authorities would go for for an up to $1.5 billion sovereign bond sale "soon".

Sri Lanka has seen a surge in foreign inflows into equities and government securities since early this month.

Foreign investors bought equities worth a net 11.9 billion rupees in the 22 consecutive sessions through Monday.

They also net bought government securities worth 4.17 billion rupees in the week ended April 19. However, they have been net sellers to the tune of 58 billion worth of government bonds so far this year.