The rupee opened somewhat wide at 133.70/90 to the US dollar around Friday's closing levels in the spot market and narrowed to around 133.78/80 in late morning trade.
In money markets overnight un-backed call money was quoted as high as 10.50/55 percent.
The Central Bank has also called for a 6.5 billion repo auction to withdraw or 'sterilize' excess cash from the banking system overnight.
Overnight sterilized money sit inside the central bank waiting to be converted into loans which will eventually hit the forex markets in the form of import demand.
Last week on two occasions the Central Bank sold Treasury bills in its stock outright to the tune of 2.5 billion rupees, killing demand permanently.
Analysts say more outright sales of its bill stocks will create conditions for Sri Lanka's peg with the US dollar to strengthen, provided no bills are purchased in Treasuries auctions to monetize debt.