Colombo, Sri Lanka – 02 September 2026 – The Central Bank of Sri Lanka (CBSL) today conducted a series of Open Market Operations (OMOs) to manage liquidity within the financial system, revealing a dynamic interplay between market demand for short and long-term funds and the banking sector’s overall liquidity position. The operations, carried out by the Market Operations Department, included overnight, short-term, and long-term repo auctions, alongside monitoring of the Call Money and Repo markets and the utilization of standing facilities.
The daily OMOs are a critical tool for the CBSL to steer interbank interest rates, ensuring financial stability and supporting its broader monetary policy objectives. Today’s operations provided key insights into the market’s liquidity landscape.
Overnight Money Market Activity Reflects Stability
In the overnight money market, the Call Money Market saw a Weighted Average Rate of 8.85%, with rates ranging from 8.70% to 8.90%. The Repo Market recorded a Weighted Average Rate of 8.91%, within a range of 8.86% to 8.95%. Total gross transactions in the Call Money Market amounted to Rs. 61,680 million, with net transactions at Rs. 59,250 million. The Repo Market reported total gross transactions of Rs. 50,495 million, mirroring its net total.
CBSL’s Targeted Repo Auctions
The CBSL conducted three distinct repo auctions to manage liquidity across various tenors:
Overnight Repo Auction
- Amount Offered: Rs. 30,000 million
- Bids Received: Rs. 50,000 million
- Amount Accepted: Rs. 30,000 million
- Weighted Average Yield: 8.71%
- Minimum Accepted Rate: 8.70%
- Maximum Accepted Rate: 8.72%
The significant demand for overnight funds, with bids exceeding the offered amount by Rs. 20,000 million, indicates a strong market appetite for short-term liquidity, which the CBSL met at its target amount.
Short Term Repo Auction (7-day maturity)
- Amount Offered: Rs. 40,000 million
- Bids Received: Rs. 5,000 million
- Amount Accepted: Rs. 5,000 million
- Weighted Average Yield: 8.75%
- Minimum Accepted Rate: 8.75%
- Maximum Accepted Rate: 8.75%
Interestingly, the demand for the 7-day short-term repo was considerably lower than the offered amount, suggesting that market participants might have had sufficient liquidity for this tenor or preferred alternative avenues for funding/investment.
Long Term Repo Auction (29-day maturity)
- Amount Offered: Rs. 10,000 million
- Bids Received: Rs. 13,000 million
- Amount Accepted: Rs. 10,000 million
- Weighted Average Yield: 9.14%
- Minimum Accepted Rate: 9.14%
- Maximum Accepted Rate: 9.14%
Similar to the overnight auction, the long-term repo auction saw bids exceeding the offered amount, with a Weighted Average Yield of 9.14%. This points to continued market demand for liquidity at longer tenors, reflecting banks’ longer-term funding needs or portfolio adjustments.
High Standing Deposit Facility Usage Signals Overall Liquidity Surplus
A key indicator of overall liquidity in the banking system is the utilization of the CBSL’s Standing Facilities. On September 2nd, the Standing Deposit Facility (SDF) saw significant usage, with Rs. 87,431 million parked by banks. In contrast, the Standing Lending Facility (SLF) was utilized by a much smaller amount of Rs. 383 million.
The substantial volume in the SDF suggests that despite the targeted repo operations, the banking system continues to hold a considerable surplus of liquidity, which banks prefer to deposit with the CBSL at the Standing Deposit Facility rate. The minimal SLF usage further reinforces the notion of overall comfortable liquidity conditions within the system.
CBSL Treasury Bill/Bonds Holdings
The CBSL’s holdings of Treasury Bills and Bonds stood at a face value of Rs. 2,492,619.35 million and a book value of Rs. 1,546,628.95 million. These holdings reflect the central bank’s balance sheet and its capacity for future open market interventions.
Today’s Open Market Operations underscore the CBSL’s ongoing efforts to manage the financial system’s liquidity effectively. The differentiated demand across various repo tenors, coupled with high Standing Deposit Facility usage, paints a comprehensive picture of a market with overall liquidity surplus but specific short and long-term funding requirements that the Central Bank actively addresses.
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