"The dollar edged down to Rs. 132.25/35 from an opening position of Rs. 132.30/40 on export conversions, but volumes were light. We are seeing enough inflows to cover daily dollar requirements," a currency dealer said.
Several currency dealers we spoke to said that the Central Bank was using moral suasion to stifle volatility in the market. Some said foreign exchange market was highly controlled, while others said the moral suasion was routine and hardly intense with volumes still relatively sluggish.
Last week authorities said they expected the exchange rate to stabilise around Rs. 125/US$.
"This has been said for a long time now and unless we some real inflows this would not happen in the short term. Official pronouncements no longer have an effect in the market unless they are factual," one dealer said.
On the interest rates front, currency dealers said rates could move up further with liquidity tight in the financial system.
"The short fall in the market is almost Rs. 205 billion, which corresponds to the CBSL holdings of government securities," a currency dealer said.