COLOMBO, Jan 10 (Reuters) - ** Sri Lanka’s rupee closed higher on Thursday as banks sold dollars but political uncertainty dented investor sentiment. ** Sri Lankan shares closed steady near a more than six-week closing low hit in the previous session. ** The Colombo Stock Index ended 0.03 percent firmer at 5,984.05, narrowly shaved from its lowest close since Nov. 27 hit on Wednesday, in dull trade as worried investors awaited political cues after the last quarter’s turmoil. The benchmark index lost 5 percent in 2018. ** Turnover was 390.1 million rupees ($2.14 million), less than half of the last year’s daily average of 834 million rupees. ** Foreign investors sold a net 274 million rupees worth of shares on Thursday. They have been net sellers of 14.1 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 74.3 billion rupees between Oct. 25 and Jan. 2, the latest central bank data showed. ** Foreign investors pulled a net 22.8 billion rupees out of stocks last year, while they net sold 159.8 billion rupees from government securities from January through Dec. 26, bourse and central bank showed data. ** The rupee ended at 181.90/182.10 per dollar on Thursday, compared with 182.25/40 in the previous session, market sources said. On Jan.3, the rupee had fallen to an all-time low of 183.00 against the dollar. ** The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. ** The rupee has declined about 5 percent since the political crisis started. ** The central bank said last week it would stick to an exchange rate policy of cautious intervention in times of excessive volatility in the forex market. ** The policy is designed to maintain a competitive exchange rate and support the rebalancing of the current account, thereby supporting a gradual build-up of reserves, central bank chief Indrajit Coomaraswamy said last week, unveiling economic policies for 2019. ** The central bank on Wednesday said that the Reserve Bank of India (RBI) had agreed to provide $400 million to it under a regional swap facility and it had also requested a further bilateral swap arrangements of $1 billion. ** Sri Lanka President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked. ** The crisis is expected to ease, though tense relations between the two men could cause fiscal problems, analysts say. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditure in 2019, averting a government shutdown from Jan. 1. ** Sri Lanka plans to increase government spending by 13.2 percent from last year to 4.47 trillion rupees ($24.51 billion) in 2019, the finance ministry said on Tuesday. ** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.
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** For a report on major currencies, click ($1 = 181.9000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)