COLOMBO, Oct 12 (Reuters) - ** The Sri Lankan rupee strengthened 0.5 percent on Friday, as inward remittances and exporters dollar sales surpassed mild importer demand for the greenback, while stocks declined for a fourth straight session and posted their lowest close in more than one week.
** The rupee ended at 169.40/70 per dollar, compared with the previous close of 171.20/40. ** The rupee fell to an all-time low of 171.60 per dollar on Wednesday, surpassing the previous low of 171.00 hit on Tuesday due to foreign selling in government securities and exporter greenback sales, market sources said. ** The central bank surprised financial markets on Oct. 2 by leaving its key policy rates unchanged, despite heavy pressure on the rupee and foreign outflows from government securities. ** The central bank said on Oct. 2 it purchased 4 million dollars from the market in the previous day, but it has sold a net 184 million dollars in the market so far this year to defend the currency.
** The rupee has weakened 0.3 percent so far this month after a 4.7 percent drop in September against the dollar. It has declined 10.5 percent so far this year.
** The Colombo stock index fell 0.4 percent to 5,815.03, its lowest close since Oct. 3. It fell 3.6 percent last month and is down 8.7 percent so far this year.
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** Data from the central bank showed foreign investors sold government securities worth a net 1.8 billion rupees ($10.58 million) in the week ended Oct. 3. Sri Lanka has seen a net outflow of 74.3 billion rupees in securities so far this year.
** Stock market turnover was 408.9 million rupees ($2.41 million) on Friday, more than half of this year’s daily average of 765 million rupees.
** Foreign investors were net sellers of 311.5 million rupees worth of shares on Friday, extending the year to date net foreign outflow to 6.6 billion rupees worth of equities. ($1 = 169.5000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Sunil Nair)