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Sri Lanka Treasuries yield frozen

Feb 20, 2012 (LBO) - Sri Lanka's Treasuries yields were kept flat Wednesday's auction with only 14.

9 billion rupees in bids for 20 billion rupees of bills being offered at the auction being accepted, data from the state debt office showed.
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The debt office which is a unit of the Central Bank said 926 million rupees of 3-month bills were sold to yield 9.10 percent, 1.1 billion rupees in 3-month bills were sold to yield 10.08 percent and 12.9 billion rupees of 12-month bills were sold to yield 11.

10 percent.

Sri Lanka's exchange rate has come under pressure in the past week, due to excess liquidity which makes markets jittery.

Unlike two year ago, credibility in Sri Lanka's dollar peg is low.

Exporters may also hold back dollars worsening short term pressure on credit as well as forex markets, needing higher rates than normal to correct markets.

Analysts have warned that Sri Lanka's high interest rates are partly due to fiscal pressure and partly due to contradictory operations in forex and money markets which require higher interest rates than would be needed had market forces been allowed to operate.

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