ECONOMYNEXT - Sri Lanka's 12-month Treasuries yields rose 32 basis points to 7.80 percent at Wednesday's auction in one of the steepest one day gains seen in recent years, data from the state debt office showed.
The 6-month yield rose 13 basis points to 7.19 percent.
The cut-off rate in the 12-month bills are estimated to be around 8.0 percent.
The debt office sold 12 billion rupees in 6-month bills and 3.7 billion rupees in 12-month bills totalling 15.7 billion rupees. Three-month bills were not offered.
The central bank especially around June last year had bought large volumes of Treasury bills with printed money, injecting unsustainable demand into the economy and generating balance of payment pressure.
There are fears that despite the rate rise more money may be printed this week as well, negating any benefit of a rise in rates to the exchange rate.
The debt office offered 24 billion rupees of bills for auction this week. There are an estimated 32 billion rupees of bills maturing.
Since the first week of December 6-month yields have risen 89 basis points and 12-month auction yields have risen 94 basis points.
Analysts call Sri Lanka's standard practice of printing money until the exchange rate collapses and then allowing rates to move up as the 'rawulath ne kendath ne' strategy.
In 2015 the budget deteriorated with steep hike in state salaries and subsidies. The deficit in the 2016 budget is also high.
The 6-month yield rose 13 basis points to 7.19 percent.
The cut-off rate in the 12-month bills are estimated to be around 8.0 percent.
The debt office sold 12 billion rupees in 6-month bills and 3.7 billion rupees in 12-month bills totalling 15.7 billion rupees. Three-month bills were not offered.
The central bank especially around June last year had bought large volumes of Treasury bills with printed money, injecting unsustainable demand into the economy and generating balance of payment pressure.
There are fears that despite the rate rise more money may be printed this week as well, negating any benefit of a rise in rates to the exchange rate.
The debt office offered 24 billion rupees of bills for auction this week. There are an estimated 32 billion rupees of bills maturing.
Since the first week of December 6-month yields have risen 89 basis points and 12-month auction yields have risen 94 basis points.
Analysts call Sri Lanka's standard practice of printing money until the exchange rate collapses and then allowing rates to move up as the 'rawulath ne kendath ne' strategy.
In 2015 the budget deteriorated with steep hike in state salaries and subsidies. The deficit in the 2016 budget is also high.
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