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Sri Lanka rolls over maturing Treasuries, yields up

ECONOMYNEXT – Sri Lanka’s 3 and 6-month Treasuries yields edged up at Wednesday’s auction with bids for 12-month bills rejected, data from the state debt office showed.

The debt office sold 9.15 billion rupees of 3-month bills at 8.71 percent up 05 basis points from a week earlier and 21.5 billion rupees of 6-month bills at an average yield of 9.67 percent, up from 9.40 percent on May 11.

A total of 30.7 billion rupees of bills was sold, successfully rolling over an estimated 30.6 billion rupees of maturing bills.

Sri Lanka’s central bank precipitated a balance of payments crisis by rejecting bids and purchasing Treasuries to its own balance sheet, but there has been a series of successful auctions over the last few weeks.

When the central bank buys Treasuries with printed money (central bank credit), excess credit and imports puts pressure on the rupee. Unless the cash is mopped up in forex market by dollar sales the rupee will fall. (Colombo/May25/2016)

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