Sri Lanka Treasuries yields up after rate hike

Apr 09, 2012 (LBO) – Sri Lanka’s Treasury bill yields rose more than 50 basis points across maturities following a rate hike at Monday’s auction held two days earlier due to traditional holidays later in the week, data from the debt office showed. Higher Treasury bill yields are needed to correct an imbalance in the economy.

The 3-month yield rose 57 basis points to 11.62 percent, the 6-month yield rose 59 basis points to 11.65 percent and the 12-month yield rose 37 basis points to 11.69 percent, the debt office, which is a unit of the Central Bank said.

Last week, the Central Bank hiked policy rates by 75 basis points to contain credit growth.

The central bank said it accepted 5.8 billion rupees of bids from the market, after offering 10 billion rupees for sale.

The debt office of the central bank usually creates balance of payments pressure and high inflation by purchasing Treasury bills to keep interest rates down and monetize government.