Sri Lanka 3-month note yield up 0.89 bps to 8.04%


ECONOMYNEXT – The yield on Sri Lanka 3-month treasury bills rose 89 basis points to 8.04% according to Wednesday’s auction data from the Public Debt Office, as interest rates continued to catch up the budget deficit.

The debt office offered Rs 85 billion in bills and accepted Rs 50.4 billion from the market.
It is not known how many bills are already at the central bank.

Offers for 6 and 12 month invoices were rejected.

Sri Lanka’s one-year bond yields slowly climbed to around 8.58% in the first quarter of 2020 after the December 2019 tax cuts, when rates were cut and unprecedented money printing took off. begin.

In the past, when the central bank tried to restore stability after generating instability with money printing, banknotes had to be bought later at rates higher than rejected offers.

According to market sentiment, one-year bills are seen at rates above 8.50 percent, which may be why the 6 and 12 month bills were rejected.

However, some savers have already started transferring money from fixed deposit to three-month bills. Banks offer around 6.25% for three-month DFs for large traded deposits.

Dealers say customer offers are now starting to hit three-month bills.

Sri Lanka’s current economic problems started around September 2014, when monetary policy deteriorated by targeting the call rate, targeting the output gap, then outright monetization and modern monetary theory to from 2020. (Colombo / October 13/2021)

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