ECONOMYNEXT – Sri Lanka has sold most a Treasuries auction after a small increase in a controlled rate, though only 10 million rupees of 12-month bills were sold, with most of the demand coming from the short term, data from the state debt office showed.
The debt office sold 26.2 billion rupees of 3 month bills after offering 8.0 billion at a 5.27 percent up from 5.24 percent a week earlier.
2.1 billion rupees of 6-month bills were sold also at 5.27 percent up 03 basis points, after offering 10 billion rupees.
Only 10 million rupees of 12 – month bills were sold at a yield of 5.32 percent up 04 basis points from a week earlier.
The debt office, which is a unit of the central bank last week raised a controlled yield for 12-mont bills by 05 basis points to 5.33 percent.
The ceiling rate serves as a de facto policy rate at which unlimited volumes of money is printed, putting pressure on the exchange rate, creating forex shortages and making it more difficult to service foreign debt.
Depending on how much of the maturing bills are already held by the central bank it may be possible to withdraw some of the liquidity injected through a failed bond auction two week ago and reduce potential forex reserve losses. (Colombo/Aug11/2021)