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Sri Lanka fails to sell 50-pct of Treasuries at auction

ECONOMYNEXT – Sri Lanka failed to sell almost half the bills offered at the weekly Treasuries auction with only 19.1 billion rupees out of 40 billion rupees being sold, data from the state debt office showed.

The debt office sold only 4.0 billion rupees of 3-month bills at the auction on September 23, after offering 9.0 billion, to fix the yield at 4.51 percent, unchanged from a week earlier.

After offering 15 billion rupees of 6-month bills only 9.2 billion rupees of bills were sold to keep the yield unchanged at 4.64 percent.

After offering 16 billion rupees of 12-month bills only 5.8 billion rupees of bills were sold to keep rate at 4.88 percent.

Data showed that about 12 billion rupees had been printed last week mainly to keep the 12 month yield at 4.88 percent.

Sri Lanka’s private credit has been negative up to July till when data is available.

Balance of payments crises had been created before 2015 by the central bank purchasing Treasury bills to inject excess liquidity when private credit was positive, analysts have shown.

The 2015/2016 crises and 2018 crises had been created by mostly open market operations, though indirect monetization of bonds was also involved. (Colombo/Sept24/2020)