(Reuters) - The Sri Lankan rupee was steady on Thursday in thin trade as inward remittances offset mild importer dollar demand, but dealers expect the local currency to edge down by the latter part of March due to seasonal demand for the greenback. The spot rupee was flat at 130.60/65 per dollar at 0729 GMT. The currency has risen 0.34 percent in the last five sessions through Wednesday, Thomson Reuters data showed. "The rupee is stable. But there could be slight gradual depreciation by the latter part of March with seasonal importer dollar demand from the middle of the month," said a currency dealer. The market has been expecting downward pressure to continue ahead of festival import demand in April and due to equity outflows, though the depreciation is expected to be mild as the central bank has strong reserves to defend the rupee. However, since Thursday, the rupee is on a gaining trend amid weak demand for dollars from importers, dealers said. The central bank said on Monday it bought a significant amount of dollars to keep the currency steady. Foreign investors have sold a net 5.41 billion rupees worth of stocks in 18 straight sessions through Wednesday, but they bought a net 709 million rupees worth of government securities in the week ended Feb. 26. The rupee has gained about 3.5 percent since it hit a record low of 135.20 on Aug. 28 last year. It lost 2.5 percent in 2013. At 0733 GMT, Sri Lanka's main stock index was up 0.29 percent, or 17.35 points, at 5,953.78, heading towards a two-week high. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

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