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Sri Lanka Treasuries yields steady, volumes under-sold

ECONOMYNEXT – Sri Lanka has 21.2 billion rupees of Treasuries after offering 23 billion rupees of securities keeping yields marginally lower than a week earlier, data from the state debt office showed.

Sri Lanka sold 5.3 billion rupees of 3-month bills after offering 7.0 billion to yield an average 6.67 percent against 6.68 percent a week earlier.

10.2 billion rupees of 6-month bills were sold after offering 4.0 billion rupees at 6.78 percent, down from 6.80 percent a week earlier.

5.7 billion rupees of 12-month bills were sold after offering 12.0 billion to yield an average of 6.92 percent.

In the recent past under-sold bills were repaid with printed money adding to excess liquidity in money markets, driving the rupee down and later triggering import controls.

The rupee has since strengthened with private credit believed to have slowed in April and May.

When money is printed and used as credit, the rupee comes under pressure, which leads to forex reserve losses or import and exchange controls leading to a crippled economy or both. (Colombo/June10/2020)