Ten banks which responded to the poll put the rupee's value at between 70.25 and 68.25 to the dollar at the end of this year.

The rupee, which fell by around eight per cent to 61.75 to the dollar last year, was trading stronger at 65.97 on Tuesday compared with 66.05 on Monday.

Sri Lanka's Central Bank has been gradually depreciating the rupee while announcing its daily rate for the dollar based on a basket of currencies of the country's trading partners and underlying trends in its macroeconomic fundamentals.

The bank allows fluctuation within only a two per cent band on either side to reduce volatility in the foreign exchange market.

Most dealers said in the poll the Central Bank, which allowed the rupee to depreciate by six per cent in the first half of the year, was likely to continue to let it fall by at least 12 per cent.

"The major factors for this being the Asian currency crisis which has adversely affected most of the economies of the region, Japanese banking sector turmoil and the nuclear tests by our immediate neighbours India and Pakistan," a foreign bank dealer said.

Another dealer ruled out the possibility of more rapid depreciation at this stage as the current economic uncertainty in Russia could hurt Sri Lanka's main exports of tea.

Pressure on the rouble has plunged Russia into a crisis and tea brokers fear it will affect exports since the former Soviet Union is Sri Lanka's biggest buyer.

"A depreciation of the rupee by 13 per cent for 1998 should be in order to make up for the lack of adequate devaluation in 1997," said another foreign bank dealer, adding the fall in regional currencies last year did not reflect in the Sri Lankan rupee.

The banks that participated in the poll were ABN Amro, American Express Bank, ANZ Grindlays, Citibank, Deutsche Bank, Hatton National Bank Ltd, Hongkong and Shanghai Banking Corp Ltd, Seylan Bank, Standard Chartered and Union Bank.