Sri Lanka injects Rs19.4bn through term auction; bill yields plunge

Mar 25, 2009 (LBO) – Yields of treasury bills fell across the board at Wednesday’s auction as the Central Bank injected 19 billion rupees through its new term auction facility on the back of earlier rate cuts, dealers said. The 3-month average auction yield fell 32 basis points to 14.62 percent, the 6-month yield fell 31 basis points to 16.16 percent and the 12-month yield plunged 73 basis points to 16.63 percent, the government’s debt office said.

Last Wednesday the Central Bank cut its de facto signal policy rate by 175 basis points to 14.75 percent and bill yields fell about 50 basis points.

This week the central bank injected 19.4 billion rupees in one-month money through its new term auction facility at rates between 12.91 to 13.01, dealers said.

The term auction facilities were announced on March 05.

On Monday 6.4 billion rupees was injected, on Tuesday 8.0 billion rupees and on Wednesday 5.0 billion rupees, dealers said.

The injections come amidst liquidity shortages in money markets from time to time, as the country is gripped by a balance of payments crisis.

The central bank’s Treasury bill stock which is a proxy on foreign reserve losses, climbed to 201 billion rupees on Tuesday from 193 billion rupees a week earlier.

On Monday the government began talks with an International Monetary Fund team on a bailout package.

The Central Bank said gross official reserves, which includes fiscal reserves were 1.4 billion dollars by January, down from 3.4 billion dollars in September. But net monetary reserves of the central bank had fallen to about 1.1 billion rupees by end January.

The rupee traded around 114.10/20 against the US dollar, dealers said.