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Sri Lanka Treasuries yields down, no money printing visible

ECONOMYNEXT – Sri Lanka’s central bank has sold 30 billion rupees of Treasury bills at an auction on May 13 with no visible money printing to keep down yields, data from the state debt office showed.

The debt office, which is a unit of the central bank, sold 13.8 billion rupees of 3-month bills after offering 7.0 billion rupees at an average yield of 6.74 percent down from 6.84 percent a week a back.

5.7 billion rupees of 6-month bills were sold after officering 9.0 billion rupees, to yield 6.83 percent, down from 6.90 percent a week earlier.

10.4 billion rupees of 12-month bills were sold at an average yield of 6.94 percent, down from 7.0 percent a week earlier.

The debt office sold the entire 30 billion rupees of bills offered. Extra 3 month bills were sold and a lower volume of 12-month bills were sold.

Sri Lanka’s private credit is expected to have slowed in April and analysts are expecting private credit to growth to fall in 2020.

Sri Lanka’s central bank triggered panic in currency markets by sending the rupee to 200 to the US dollar by cutting rates and injecting excess liquidity to money markets before credit slowed, analysts have said.

The Coroanvirus crisis led to an abrupt halt in economic activity and people were reduced to subsistence level existence that was seen in the 1970s in Sri Lanka. However subsistence level existence leads to unemployment and lower tax revenues to the state.

When private credit is strong any printed money will put pressure on the currency and trigger ‘foreign currency shortages’ and also raise doubts about the ability of the government to settle foreign loans. (Colombo/May13/2020)





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