01 percent, following the trend in secondary markets, while the 12-month yield edged up slightly at this week's auction, official data showed.
The 6-month yield fell 3 basis points to 12.29 percent and the 12-month yield rose 10 basis points to 12.60 percent at Wednesday's auction, the state debt office which is a unit of the Central Bank said.
The debt office sold 31.6 billion rupees of bills, made up of 8.
1 billion rupees of 3-month bills, 18.9 billion in 6-month bills and 5.
1 billion rupees of 12-month bills.
Analysts have said that with Treasury bill yields now apparently following market demand the key threat to Sri Lanka's rupee peg has been removed.
Sri Lanka's rupee peg came under pressure as Treasuries yields were heavily manipulated during the second half of 2011 with Bills purchased with printed money.
With rates falling, indicating strong interest in bills, analysts say the Central Bank should now trim its Treasury bill stock through outright sales, withdrawing liquidity which will help strengthen the exchange rate.
Sri Lanka's state got the power to print money and buy Treasury bills in 1951 with the creation of a central bank resulting chronic deprecation, periodic balance of payments crises, high inflation and impoverishment of the people.
From 1885 to 1951 the exchange rate was fixed though a 'hard peg' or currency board.