ECONOMYNEXT – Sri Lanka sold only 5.7 billion rupees of Treasuries at an auction Wednesday, rejecting other bids, data from the state debt office showed, raising fears of more money printing and pressure on the currency.
The debt office which is a unit of the central bank rejected bids for 3 and 6-month bills and accepted only 5.78 billion rupees of bids after offering 20 billion rupees of Treasuries for auction.
There is an estimated 30 billion rupees of more of bills maturing this month.
In the bills are repaid with printed money, the excess demand from the newly created money will put more pressure on the currency, analysts say.
The Central Bank will then have to depreciate the rupee, or mop up the rupees in the forex markets by spending its forex reserves.