The rupee closed 1.1 per cent firmer at 129.40/70 to the dollar compared with Wednesday’s close of 130.90/131.
“The rupee stretched on heavy equity market inflows and we have seen exporters selling following the banks selling,” said a currency dealer, asking not to be identified.
The rupee has strengthened 2.10 per cent so far this month but it has depreciated 14 per cent since allowing a flexible exchange rate in November.
The Colombo Stock Exchange’s main index ended 0.1 per cent, or 5.66 points, higher at 5,949.42.
Shares in Aviva NDB Insurance fell 9.28 per cent to 398.70 rupees and National Development Bank fell 4.86
per cent to 144.80 rupees a share.
AIA Group Ltd. has agreed to buy British insurer Aviva’s 92.3 per cent stake in Aviva NDB Insurance.
The exchange has been overbought since 28 August, Thomson Reuters data shows. The 14-day Relative Strength Index on Thursday was at 82.913, well above the upper neutral range of 70.
Turnover on Thursday was Rs. 1.87 billion ($ 14.27 million), more than this year’s daily average of Rs. 947 million.