Sri Lanka 3-month Treasuries fall below repo rate

Ishara S. Kodikara | AFP | Getty Images Sri Lanka Prime Minister Ranil Wickremesinghe, center, speaks to supporters at the prime minister's official residence in Colombo on December 16, 2018, after he was reappointed as prime minister by Sri Lanka's president, the same man who fired him from the job nearly two months ago.

Nov 11, 2009 (LBO) – Sri Lanka’s 3-month Treasuries yield fell below the repo rate of 8.00 percent at which the Central Bank drains cash from the banking system in a currency board-style free fall of interest rates amid excess liquidity and weak credit demand. The 3-month yield fell 41 basis points to 7.73 percent, the 6-month yield fell 22 basis points to 8.80 percent and the 12-month yield fell 12 basis points to 9.56 percent, at Wednesday’s auction, the government’s debt office said.

Sri Lanka central bank has a policy rate corridor of 8.0 and 10.50 percent through which it drains and injects liquidity to control interest rates.

But credit demand has been weak in the economy and money has also flowed through a peg with the US dollar at just under 115.0 rupees.