Sri Lanka fails to sell 65-pct of bills at auction

ECONOMYNEXT – Sri Lanka has failed to sell 65 percent of the offered 40 billion rupees at an Treasuries auction Wednesday despite 74.4 billion rupees of bids coming in, data from the state debt office showed.

The debt office sold 11.5 billion rupees of bills at 4.72 percent, up 02 basis points from a week earlier, after offering 7.0 billion rupees.

Only 708 billion rupees of 6-month bills were sold at 4.85 percent, up 07 basis points from a week earlier after offering 5.0 billion rupees.

The debt office only sold 1,650 billion rupees of 12-month bills after offering 28.0 billion rupees at 5.04 percent, up 02 basis points from a week earlier.

The debt office lifted price controls on 03 and 06 bills this week, but kept the ceiling on 12 months.

The unsold bills are usually taken up by the central bank with printed money which then leads to currency depreciation or foreign reserve losses when the peg is defended.

Some of the maturing bills which are repaid with printed money do not relate to the current year deficit, but date back from earlier but is turned into reserve money by the rejection of bills, analysts say.

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