Apr 03, 2012 (LBO) – Sri Lanka’s Treasury bill yields were held flat by at Wednesday’s auction ending several weeks of corrections that helped push up market rates to reduce pressure on the exchange rate. However other data indicated that Sri Lanka has lost over 200 million dollars of reserves in just two days in April.
Once a clean currency float takes hold, interest rates can fall automatically. Data released by the state debt office showed that one year yields were held flat at 11.32 percent, six month yields were held flat at 11.
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06 percent and 3-month bills rose 05 basis points to 11.05 percent.
Sri Lanka’s central bank can print money and hold down Treasury bill yields creating high inflation and balance of payments crises.
Rates were allowed to move up from until last week, helping contain the balance of payments crisis.
Earlier today the International Monetary Fund released a 427 million dollars tranche of money held back after rates were allowed to move up and corrective steps taken.
The Central Bank said end March foreign reserves had recovered to 6.1 billion US dollars from 5.8 billion dollars in December.