COLOMBO, April 12 (Reuters) - The Sri Lankan rupee hit a new one-year closing high on Friday, led by inward remittances ahead of the traditional new year, dealers said, while stocks ended at a two-and-a-half month high ahead of a long weekend.
Both currency and stock market only traded for half the day on Friday ahead of the traditional new year, which most Sri Lankans will celebrate on April 13 and April 14. Both markets will be also closed on Monday.
The rupee edged up to 125.30/35 to the dollar, its highest close since April 9, 2012, from Thursday's close of 125.35/40.
The rupee has been on the rise since mid-March on inflows from remittances and exporter dollar sales ahead of the traditional new year, which most Sri Lankans will celebrate on April 13 and April 14.
Currency dealers expect the rupee to appreciate further in the coming weeks due to an expected inflow of $500 million from a bond sale by state-run Bank of Ceylon.
The currency has risen 1.78 percent this year after falling 10.7 percent in 2012.
The main stock index gained 0.46 percent, or 26.51 points, to 5,839.88, its highest close since Jan. 28.
Analysts said hopes of falling interest rates boosted sentiment, though the market saw thin trade as many investors were on holiday ahead of the traditional new year.
Treasury Secretary P.B. Jayasundera on Tuesday said Sri Lanka's interest rates should fall in May-June as the borrowing needs of loss-making state energy firms recede.
Stockbrokers said the broad market expects the central bank to slash the key monetary policy rates at its April monetary board meeting. The April monetary policy rates will be announced at 0200 GMT on Tuesday.
The turnover was at 288.4 million rupees in the short trading day. This year's daily average is about 1 billion rupees.
Foreign investors were net buyers of 16.4 million rupees worth of shares, extending the year-to-date net foreign inflow to 6.45 billion Sri Lanka rupees ($51.45 million). Last year, the bourse saw a net inflow of $303 million. ($1 = 125.3750 Sri Lanka rupees)
(Reporting by Shihar Aneez; Editing by Anand Basu) Keywords: MARKETS SRILANKA/
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