Sri Lanka's rupee has gained 6 percent since the first half of 2012 said the Central Bank on Friday upbeat from last year's beginning when it dipped to record lows, at one point depreciating by as much as 16 percent.

Significant foreign inflows have strengthened the rupee by 6 percent against the dollar since the first half last year, a Central Bank statement noted.

"As a result of the significant foreign inflows already being witnessed, the rupee, which appreciated by 5.3 percent against the U.S. dollar during the second half of 2012, appreciated further by 0.6 percent by 15 January 2013," the bank said in comments following the first monetary policy review for 2013.

The Central Bank also said the external sector projections target a higher Balance Of Payment (BOP) surplus in 2013 with expectations of an improved trade balance, increased earnings from service exports, higher workers' remittances, increased inflows to the Government and capital markets, and in the form of foreign direct investments.

However in 2012 the government only managed to raise half of its Foreign Direct Investment (FDI) target of 2 billion U.S. dollars and relies heavily on foreign loans for development.

During the 2012 Budget speech President Mahinda Rajapaksa announced a 3 percent depreciation of the currency that was largely unexpected.

In the next few months the rupee saw a free fall of 16.6 percent in three months with the Central Bank stepping in during February 2012 to stabilize rates. However, since then the rupee has seen signs of recovery, especially during the last two months as foreign inflows increased.