The highest rates at which bids were accepted by the government for the 3-month maturity, the cut-off, has topped 17.30 percent, dealers said.
Tight Money
Sri Lanka's central bank no longer operates a policy rate environment and open market operations have largely been limited to sterilizing excess liquidity as it is now pursuing a tight monetary targeting framework.
The bank has been limiting its interventions in Treasury bill auction, the principal mechanism for printing money to finance the budget deficit, since the beginning of the year, with inflation falling sharply.
However fiscal policy has not been complementary, leading to high interest rates.
This year's budget deficit is projected at 9.2 per