Sri Lanka Treasuries yields rise across maturities

ECONOMYNEXT – Sri Lanka’s Treasuries yields rose across maturities at Wednesday’s auction with the 12-month yield rising 24 basis points to 8.31 percent, data from the state debt office showed.

The 3-month yield rose 04 basis points to 7.84 percent at the auction on August 21. The six month yield rose 4 basis points from an auction on 07.08.2019.

The debt office broadly sold the same volumes offered.

The debt office sold 1.61 billion rupees in 3-month bills after offering 1.5 billion rupees and 1.52 billion in 6-month bills after offering 1.5 billion rupees of bills at the auction.

In 12-month bills, the debt office offered 15 billion rupees of bills and sold 8.31 percent.

The central bank no longer prints money at bill auctions to push rates down and generate monetary instability and currency collapses.

In 2018 all monetary instability was generated with excess liquidity from several lender of last resort windows, extended unsterilized liquidity and disruptive falls in liquidity from maturing legacy swaps which were then filled with cash injections as well as sterilized forex sales after credibility of the peg was lost.

On August 20, the central bank bought 2.75 billion rupees of bills through an outright auction at around 7.86 percent, with maturities of 302 to 316 days.

However on August 15, there was a steep fall in liquidity following a period of unsterilized excess liquidity. (Colombo/Aug21/2019)