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Monday November 29th, 2021
Bonds & Forex

Sri Lanka fails to sell 54-pct of Treasuries auction under yield controls

ECONOMYNEXT – Sri Lanka has failed to sell 54.8 percent of a 53.5 billion rupees Treasury bill auction despite a ceiling rate, which is operating as a de facto policy rate being raised 05 basis points to 5.38 percent, data from the debt office showed.

23.3 billion rupees of 3-month bills were sold at 5.33 percent up 05 basis points from a week earlier after offering 17.5 billion.

932 million rupees of 6-month bills were sold at 5.34 percent up 07 basis points.

There were no sales of 12-month bills.

The ceiling rate acts as a de facto policy rate below the 5.50 percent overnight rate as the central bank usually prints money and injects liquidity to buy unsold bills.

Over the last two weeks however the central bank managed to sell down a part of its bill stock acquired in a failed bond auction in July through two auctions.

It is not clear how much of the maturing bills are already held by the central bank.

Sri Lanka has turned large volumes of government securities into reserve money which are exchangeable for rupees through the ceiling rate creating pressure on the rupee and balance of payments deficits over the past year and foreign reserves are now down to low levels.

The rupee has also fallen to around 215 to the US dollar for imports. (Colombo/Aug18/2021)

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