S.Lanka's rupee at 3-week closing high on high call

COLOMBO, April 4 (Reuters) - Sri Lanka’s rupee climbed to its highest close in three weeks on Friday as banks sold dollars to raise funds as high call rates made borrowing in rupees expensive. Shares fell on profit taking.

Interbank lending rate CLIBOR jumped to 19.5 percent before closing at 16.236 percent against 13.409 percent on Thursday, and dealers said they expected the rate to hit 40 percent next week when demand usually swells for Sinhala and Tamil festivals.

The rupee LKR= rose to 107.52/62 per dollar, its highest close since March 12 and up from Thursday's 107.80/85. It had hit a 14-month-high of 107.40/50 on March 10.

Shares came off slightly after big gains this week. The Colombo All-Share index .CSE closed 0.17 percent or 4.53 points down at 2,624.97.

The index had rallied 2.75 percent on Tuesday, the biggest rise since a 3.11 percent gain on May 18 last year, after a $297 million stake sale in Sri Lanka Telecom SLTL.CM went through at a large premium.

“Investors sold select bluechips like Dialog and John Keells Holdings to take profits,” said Geeth Balasuriya, assistant research manager at HNB Stockbrokers.

Market heavyweight and Sri Lanka's No. 1 mobile phone provider Dialog Telecom DIAL.CM fell 1.47 percent to 16.75 rupees calculated on a weighted average.

Top conglomerate by market capitalisation John Keells Holdings JKH.CM closed 1.03 percent down at 119.75 rupees.

Sri Lanka Telecom, the country’s top fixed-line phone operator, rose 0.52 percent to 48.25 rupees after Malaysian mobile network operator Maxis Communications said it would sent offer letter to shareholders in the next few weeks to buy their stake at 50.50 rupees a share.

Maxis had made the offer after it bought 35.19 percent of Sri Lanka Telecom on April 1.

Market turnover was 231.82 million rupees ($2.2 million), over half of the last year’s average daily turnover. On Tuesday, turnover had hit 33.42 billion rupees, the highest ever, mainly on the telecom stake sale.

The market is 3.3 percent up for the year after sliding almost 7 percent in early January, when the government scrapped a shaky truce with Tamil Tiger rebels. ($1=107.57 rupees)