Inflation ( CCPI)50.6% (Feb 2023)
GDP-12.4% (4Q 2022)
Unemployment5.0% (3Q 2022)
3M T-Bill Rate25.99%
12M T-Bill Rate24.31%
5Y T-Bond Rate27.00%/ 27.25%
10Y T-Bond Rate22.00% / 23.00%
USD/LKR335/341
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Reserves $2.22Bn (Feb 2023)
Cum. Trade Deficit $449Mn (Feb 2023)
Cum. Fiscal DeficitLKR 1,601Bn (Nov 2022)

Treasury Bill rates fell substantially with improvement of LKR liquidity

Interest RatesMar 8, 2023
Treasury Bill rates fell substantially with improvement of LKR liquidity
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91Days T-bill rate fell from 29.59% to 28.75%, while 182Days T-Bill fell from 28.64% to 27.77%, and 364Days T-Bill too fell from 27.64% to 26.43%. CBSL managed to sell the required amount of T-Bills to the market amounted to LKR 85Bn.

Last week CBSL increased the policy rate by 1% to neutralize the inflationary pressure generated through increased LKR liquidity in the market as CBSL bought over USD 300Mn from the forex market.

CBSL raised its policy rate by 7.0% in April 2022, where the T-bill rate jumped from 14% to 23% immediately. Then CBSL applied another rate hike of 1%, resulting T-Bill rates jumping from 23% to 28% immediately. This including in the short-term yield curve fueled the requirement for a domestic debt restructuring as the cost refinancing increased at a faster phase during the period under consideration.

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