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COLOMBO, March 31 (Reuters) - The Sri Lankan rupee ended stronger on Friday, helped by inward remittances and selling of the greenback by exporters ahead of the festival season, but the gains were capped by dollar demand from a foreign bank in late trade, dealers said.
Rupee forwards were active, with two-week forwards ending at 152.45/50 per dollar, compared with Thursday's close of 152.55/65.
"There were a lot of conversions by exporters ... maybe to pay the salaries and bonuses. The (inward) remittance flow was also high," said a currency dealer who did not wish to be named.
"In the latter part of the day a foreign bank bought dollars, maybe for repatriation of corporate profits due to the end of the quarter."
The rupee has been under pressure due to dollar demand to meet increased seasonal imports ahead of the traditional new year that is celebrated on April 13-14, dealers said.
The central bank on Monday raised the spot rupee reference rate by 10 cents to 151.70. It had raised the reference rate by 25 cents on March 20.
The central bank raised interest rates for the first time in eight months on March 24, saying tighter policy was a precaution against a build-up of inflationary pressures.
Analysts said the rate hike, a move that was also aimed at easing pressure on the rupee, could help stabilise the domestic currency that has been hurt by rising imports and outflows due to rupee bond sales by foreign investors.
Foreign investors net bought government securities worth 70 million rupees ($461,285) in the week ended March 22, but they have net sold 63.2 billion rupees of such instruments so far this year. ($1 = 151.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)