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Sri Lanka Treasury auction yields flat, bills undersold

ECONOMYNEXT – Sri Lanka’s Treasury bill yields were flat at Wednesday’s auction with 22.1 billion rupees of bills sold after offering 30 billion rupees of securities, data from the state debt office showed.

It was not clear whether the balance 7.9 billion rupees of bills were purchased with printed money to keep rates down, put further pressure on the rupee, lose forex reserves when the currency depreciates and gradually drive the country towards credit downgrade.

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The debt office which is a unit of the central bank said 9,665 million rupees of 3.0 month bills were sold at 6.75 percent, unchanged from a week earlier.

7,809 million rupees of 6-month bills were sold at 6.80 percent, almost unchanged from 6.79 percent a month earlier.

4,657 million rupees of 12-month bills were sold at 7.00 percent, unchanged from last week after offering 18 billion rupees of bills.

In general there is an idea spread in Sri Lanka and elsewhere that money is printed to generate instability at the behest of the Treasury, but it 2018, there was no pressure from the finance ministry to print money by bill purchases.

All the liquidity that was injected in 2018 to trigger monetary instability came from central bank independence, analysts say. (Colombo/Apr22/2020)

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