Sri Lanka central bank expects to meet June reserve money target ‘comfortably’

May 22, 2007 (LBO) – Sri Lanka will reach the June reserve money target 'comfortably' with interest rates at current levels, the Central Bank said in its May monetary policy review. Though reserve money increased in April from a higher demand for currency, the bank says it was able to meet an internal target for April, with a combination of overnight and permanent absorption of excess liquidity.

Comfort Factor

"Currently, reserve money is well within the target and interest rates have reached a stable level," the Central Bank said Tuesday in its monetary policy review.

"It is expected that the reserve money target set for June could also be achieved comfortably."

The Bank has a 250.4 billion rupee reserve money target for June. By last Thursday the monetary authority had brought down reserve money to 245 billion rupees.

At last week's Treasury bill auction the weighted average yield edged up 11 basis points to 16.54 percent and the three month rates moved up 8 basis points to 16.60 percent

The 3-month Treasury bill auction rate at 16.60 percent has now become a signa