* Rupee slips from 3-wk high
* Shares edge up on banks, hotels
COLOMBO, April 5 (Reuters) - Sri Lanka's rupee slipped on Thursday on late importer dollar demand a nd dealers expect that the currency may not hold at the current level of 125 a dollar due to rising oil bills and declining remittances.
The rupee edged down to 125.80/126.00 a dollar from Wednesday's close of 125.45/50. Dealers said the currency was trading firmer and hit 125.00, but some last-hour importer dollar demand pulled it down.
Treasury Secretary P.B. Jayasundera on Wednesday said the rupee has now bottomed out, and should not weaken again past 125 under the current economic conditions.
"Unless we see some inflows, it is difficult to hold the rupee at the 125 level with the rising dollar demand for oil bills and diminishing remittances after the festive season," said a currency dealer on condition of anonymity.
The currency has risen 4.5 percent since hitting a record low of 131.60 on March 19, but overall has fallen 9.21 percent since the central bank stopped defending it on Feb. 9.
After the markets closed central bank raised its policy rates as expected to curb credit growth, which it said appeared to be expanding at an "undesired pace".
The stock market edge up 0.41 percent or 22.34 points to 5,423.25 on Thursday on select buying in hotels and banks, with many investors staying on the sidelines.
The day's turnover was 634.9 million Sri Lanka rupees ($5.1 million), well below this year's daily average of 1.33 billion. Foreign investors were net buyers of 137.7 million, extending the net offshore buying to 21. 1 billion so far in 2012.
The Colombo bourse is one of the worst performers this year among Asian markets, with a 10.72 percent loss.
Stock and foreign exchange markets will be closed on Friday to mark the Good Friday holiday. Normal trading will resume on Monday. ($1 = 125.3500 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Bryson Hull)