The rupee closed at 126.12/20 to the dollar from Wednesday's close of 126.20/30.
'We saw foreign inflows into treasury bonds. The central bank bought dollars from the market to prevent a sharp gain,' a currency dealer said.
Deputy central bank governor Nandalal Weerasinghe said the central bank had been buying dollars for a few days to prevent volatility.
Currency dealers expect more inflows into treasury bonds and bills after the government's debt office said on Wednesday Sri Lanka could accommodate up to 60 billion rupees foreign investment in government securities this year.
Sri Lankan stocks edged down for a second session, despite foreign inflows. The main share index closed 0.22 percent, or 12.89 points, down at 5,732.21.
Foreign investors were net buyers of 139.5 million rupees ($1.10 million) worth shares on turnover of 1.01 billion rupees.
($1 = 126 rupees)
(Reporting by Shihar Aneez; Editing by Nick Macfie)
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