Colombo, 03 September 2026 – The Central Bank of Sri Lanka (CBSL) today concluded its open market operations (OMOs), demonstrating its continuous efforts to manage systemic liquidity and influence short-term interest rates within the Sri Lankan economy. The operations on September 3rd, 2026, provided key insights into the current state of the nation’s money market and the banking sector’s liquidity position.
Open Market Operations are crucial tools used by the CBSL to implement monetary policy, aiming to maintain price stability and support economic growth by adjusting the availability of money in the financial system. Today’s activities, conducted by the Market Operations Department, included overnight money market transactions, repo auctions, and the utilization of standing facilities.
Overnight Money Market Reflects Stability
The overnight money market saw stable activity, with weighted average rates indicating a balanced environment for interbank lending. The key figures reported are:
- Call Money Market:
- Weighted Average Rate: 8.86%
- Minimum Rate: 8.80%
- Maximum Rate: 8.91%
- Total Gross Amount: Rs. 53,510 million
- Total Net Amount: Rs. 52,260 million
- Repo Market:
- Weighted Average Rate: 8.91%
- Minimum Rate: 8.86%
- Maximum Rate: 8.95%
- Total Gross Amount: Rs. 66,780 million
- Total Net Amount: Rs. 65,030 million
These rates suggest that financial institutions largely met their short-term funding needs within a narrow band, reflecting a degree of predictability in the market.
CBSL Conducts Repo Auctions to Fine-Tune Liquidity
The Central Bank conducted two significant repo auctions today, offering liquidity to the market. The outcomes suggest a lower demand for the offered liquidity, indicating potentially sufficient or surplus funds within the banking system.
Overnight Repo Auction
The overnight repo auction, maturing on September 4th, saw the CBSL offer Rs. 40,000 million. However, bids received amounted to Rs. 23,200 million, all of which were accepted. The weighted average yield stood at 8.70%, with the minimum accepted rate at 8.70% and the maximum at 8.71%.
Short Term Repo Auction (6 Days)
A short-term repo auction with a maturity of 6 days (maturing on September 9th) also saw an offering of Rs. 40,000 million. Similar to the overnight auction, the bids received were lower than the offered amount, totaling Rs. 15,000 million, all accepted. The weighted average yield for this tenor was 8.75%, with both minimum and maximum accepted rates at 8.75%.
The fact that the total bids received in both auctions (Rs. 38,200 million) were significantly less than the total amount offered (Rs. 80,000 million) suggests that banks were not in pressing need for additional liquidity from the CBSL at the offered rates, aligning with the observed stability in the overnight market.
Standing Facility Usage Indicates Ample Liquidity
Further evidence of the banking system’s liquidity position comes from the utilization of the CBSL’s Standing Facilities:
- Standing Deposit Facility (SDF): Financial institutions placed Rs. 77,645 million with the CBSL. This substantial figure indicates that banks held considerable excess liquidity, choosing to park it with the Central Bank.
- Standing Lending Facility (SLF): A much smaller amount of Rs. 760 million was utilized through the Standing Lending Facility, suggesting only a few institutions may have had very short-term liquidity shortfalls.
The high usage of the SDF points towards an overall liquid banking sector, where institutions have more funds than immediate lending opportunities or reserve requirements demand.
CBSL Treasury Bill/Bonds Holdings
The report also provided an update on the CBSL’s holdings of Treasury Bills and Bonds:
- Face Value: Rs. 2,492,619.35 million
- Book Value: Rs. 1,549,404.90 million
These holdings are a significant part of the Central Bank’s balance sheet and are utilized in its ongoing monetary operations to manage market liquidity and government financing.
Today’s open market operations highlight the Central Bank’s proactive role in maintaining monetary stability and ensuring an adequate flow of funds within the financial system. The data from September 3rd, 2026, confirms a generally stable and liquid environment in Sri Lanka’s money market, with the CBSL continuing to monitor and adjust as necessary to support the nation’s economic objectives.
Source: Read original document
