COLOMBO (AFP) -- Sri Lanka plans to open its bond market to foreign investors as part of a bid to develop its capital markets, the Central Bank said.

The Bank was working on a method to allow foreigners to purchase five percent of government bonds, its Superintendent of Public Debt, Chandra Premaratne, told AFP.

"Once the guidelines are ready, we can start issuing bonds to foreign investors," she said. She gave no timeframe for when the guidelines would be ready.

Total outstanding government debt now stands at 476 billion rupees (4.7 billion dollars).

"Accordingly, the amount offered to non-residents would be 24 billion rupees or around 230 million dollars," the bank said in a statement. The bank said the measure was "intended to further enhance the development of the capital markets by increasing foreign exchange inflows and to increase resources in the domestic money and capital markets."

Meanwhile, the Sri Lankan rupee hit a record low Monday to close at 106.88 rupees against the dollar on importer demand to settle trade bills.

The currency was undermined further by news of a powerful blast that killed at least 102 people on Monday in the island's bitter ethnic conflict.

Market players expect the rupee to sink to 107.00 to the dollar as Sri Lanka's security situation worsens.

The rupee has fallen over three percent against the dollar since the start of 2006 and analysts estimate the central bank has spent nearly 150 million dollars in the past few weeks defending the local currency.