COLOMBO, Dec 31 (Reuters) - The Sri Lankan rupee ended little changed on Tuesday, while state-run banks defended the currency, which had lost 2.5 percent in the year following a 10.7 percent depreciation in 2012.
Dealers expect the currency to appreciate in the first quarter of 2014 due to a possible dollar bond inflow before falling due to lower interest rates pressurising the exchange rate amid pick in importer dollar demand.
The spot rupee closed at 130.75/90 per dollar, slightly weaker from Monday's close of 130.80/90.
"The market expects little appreciation of the rupee in the first quarter if the government goes for $1.5 billion bond issue. But falling interest rates may pressurise the exchange rate from the second quarter," a currency dealer said on condition of anonymity.
The local currency has gained about 3.3 percent since it hit a record low of 135.20 on Aug. 28. (Reporting by Shihar Aneez; Editing by Anand Basu)