Outright sales

Central Bank may start outright sales of government securities as early as next week with rising foreign inflows boosting the countrys money supply.rnrn
ldblquote We have not made a final decision but we may hold the first auction next week,
dblquote says Dr. D. S. Wijesinghe, Head of Central Banks Domestic Operations.rn

rnThis indicates a slight departure from its recent open market operations, which have been confined to the overnight market.rn

rnCentral Bank is currently sitting on over Rs 35 bn in treasuries, mostly acquired during exchange crises as falling foreign reserves drained liquidity from the system.rn

rnIn recent weeks the Bank has generally been on the buying side to the tune of Rs 10 bn or more as excess liquidity forced market players to park money at Central Bank through the repurchase mechanism.rn

rnOfficials now believe that the time has come to take away some of this cash permanently from the system, by outright sales of its existing stock of bills.rn

rnMarket players sa