COLOMBO, Sri Lanka – 28 August 2026 – The Central Bank of Sri Lanka (CBSL) today concluded its daily Open Market Operations (OMOs), providing a detailed snapshot of the country’s money market liquidity and short-term interest rate landscape. The operations, managed by the Market Operations Department, saw the CBSL actively engaging to maintain stability and influence market conditions through various repo auctions and standing facilities.
Overnight Money Market Reflects Current Liquidity
On August 28, 2026, the overnight money market displayed varied activity across its segments. The Call Money Market recorded a weighted average rate of 8.84%, with rates ranging from a minimum of 8.75% to a maximum of 8.88%. Total gross transactions in this segment amounted to Rs. 44,350 million, with net transactions at Rs. 41,600 million.
Concurrently, the Repo Market saw a weighted average rate of 8.90%, with the minimum rate at 8.86% and the maximum reaching 9.05%. The total gross amount transacted in the repo market was Rs. 98,475 million, mirroring the net amount.
These rates and transaction volumes provide critical indicators of the prevailing liquidity conditions and the cost of short-term borrowing and lending among financial institutions in the interbank market.
CBSL’s Repo Auctions Address Market Liquidity Needs
The CBSL conducted three distinct repo auctions to manage liquidity, offering various tenors to the market:
Overnight Repo Auction
- Amount Offered: Rs. 40,000 million
- Bids Received: Rs. 19,500 million
- Amount Accepted: Rs. 19,500 million
- Weighted Average Yield: 8.74%
- Minimum Accepted Rate: 8.72%
- Maximum Accepted Rate: 8.75%
This auction was undersubscribed, with the CBSL accepting all bids received at a weighted average yield of 8.74%. The settlement and maturity dates were set for August 28 and August 31, 2026, respectively.
Short Term Repo Auction
- Amount Offered: Rs. 20,000 million
- Bids Received: Rs. 10,000 million
- Amount Accepted: Rs. 10,000 million
- Weighted Average Yield: 8.75%
- Minimum Accepted Rate: 8.75%
- Maximum Accepted Rate: 8.75%
- Days to Maturity: 05
Similar to the overnight auction, the short-term repo was undersubscribed, with Rs. 10,000 million accepted at a uniform yield of 8.75%. This tranche will mature on September 2, 2026.
Long Term Repo Auction
- Amount Offered: Rs. 20,000 million
- Bids Received: Rs. 29,000 million
- Amount Accepted: Rs. 20,000 million
- Weighted Average Yield: 9.19%
- Minimum Accepted Rate: 9.18%
- Maximum Accepted Rate: 9.19%
- Days to Maturity: 30
In contrast to the shorter-term auctions, the long-term repo auction, settling on August 31 and maturing on September 30, 2026, was oversubscribed. The CBSL accepted the full offered amount of Rs. 20,000 million at a weighted average yield of 9.19%, indicating stronger demand for liquidity over a longer horizon and reflecting a term premium.
CBSL Standing Facilities and Treasury Holdings
The utilization of the CBSL’s standing facilities further elucidated the market’s liquidity position. Financial institutions placed a substantial Rs. 83,815 million in the Standing Deposit Facility (SDF), signaling significant excess liquidity in the banking system. Conversely, the Standing Lending Facility (SLF) saw minimal usage, with only Rs. 190 million being drawn, indicating limited acute shortfalls in liquidity among banks.
The CBSL’s balance sheet also indicated robust holdings of government securities, with a face value of Rs. 2,492,619.35 million and a book value of Rs. 1,528,777.09 million in Treasury Bills and Bonds. These holdings are crucial for the Central Bank’s ability to conduct open market operations and influence the broader financial system.
The daily OMOs underscore the CBSL’s continuous efforts to manage liquidity effectively, guide short-term interest rates, and foster stability in Sri Lanka’s financial markets.
Source: Read original document
