Sri Lanka has printed 22 billion rupees in the week to June 18, after failing to sell 60 percent of the bulk of a 50 billion rupees of bills offered at a price ceiling of 5.21 percent, as money printing resumed after a pause in April and May, data shows.
The central bank’s Treasury bill and bond holding grew to 896.2 billion rupees on June 18 at the auction settlement day from 874.3 billion rupees a week earlier.
Sri Lanka paused money printing in April and May after receiving a 500 million US dollar loan from the China Development Bank but liquidity injections resumed in June.
Over the past week window borrowings had also gone up from 6.7 billion rupees in June 11 to 30.6 billio rupees on June 18.
Last week Sri Lanka failed to sell 60 percent of a 50 billion rupee Treasury bill auction after placing a yield ceiling of 5.21 percent for 12-month bills.
When residual bill are purchased at 5.21 percent for one year bills or slightly lower rates for 3 or 6 bills at the weighted average rate, the yields serve as de facto policy rates at a particular tenor, EN’s economic columnist Bellwether says.
Over April and May, liquidity was withdrawn at around the same rates with successful bill auctions, indicating that liquidity was being sterilized in both directions.