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Thursday December 9th, 2021
Bonds & Forex

Sri Lanka sells Rs61bn in Treasuries, 3-month yield down 22bp

ECONOMYNEXT – Sri Lanka has sold all the offered 61 billion rupees of Treasury bills at Wednesday’s auction with the 3-month bills falling 22 basis points to 7.53 basis points, data from the state debt office showed.

The debt office offered 18 billion rupees of 3-month bills and sold 49.17 billion rupees.

10.4 billion rupees of 6-month bills were sold at 8.02 percent, down 01 basis point from a week earlier after offering 18 billion rupees.

1.41 billion rupee of 12-month bills were sold at 8.16 percent, down 01 basis point after offering 25 billion rupees.

The central bank has been rolling over all maturing bills this month including its own holdings. Rolling over will reduce new injections and help reduce foreign reserve losses.

While the pace of money printing has slowed after price controls were lifted, with foreign exchange markets dysfunctional, it is unable to sell down its own stock of bills permanently to build reserves.

Though maturing bills in the central bank portfolio is being sold down, banks are giving the bills back to the central bank and borrowing printed money from the overnight at 6.0 percent.

While the central bank has sold its outright held bills stock from 1,466 billion rupees at the end of October to 1,436 billion rupees, overnight borrowings have gone up from 261 billion rupees to 323 billion rupees.

The central bank is also mopping up some of the injected money through repo auctions and overnight. An estimated 40 billion rupees had been injected over November. (Colombo/Nov24/2021)

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