Colombo, Sri Lanka – 22 September 2026 – The Central Bank of Sri Lanka (CBSL) continued its crucial role in managing domestic money market liquidity and guiding short-term interest rates today, with a series of Open Market Operations (OMOs) conducted by its Market Operations Department. The daily interventions underscore the CBSL’s commitment to maintaining financial stability and supporting the broader Sri Lankan economy.
Today’s operations provided insights into the prevailing liquidity conditions within the banking system, reflecting the careful calibration by the CBSL to ensure adequate, but not excessive, funds are available for interbank transactions.
Overnight Money Market Performance
The overnight money market saw active participation, with rates reflecting current liquidity levels. Here’s a breakdown:
- Call Money Market:
- Weighted Average Rate: 8.92%
- Minimum Rate: 8.85%
- Maximum Rate: 8.96%
- Total Gross Amount: Rs. 48,080 million
- Total Net Amount: Rs. 48,080 million
- Repo Market:
- Weighted Average Rate: 8.97%
- Minimum Rate: 8.92%
- Maximum Rate: 9.03%
- Total Gross Amount: Rs. 87,100 million
- Total Net Amount: Rs. 86,100 million
The convergence of rates across both segments, hovering close to the policy corridor, indicates a relatively stable overnight funding environment.
CBSL’s Targeted Open Market Operations
The CBSL conducted two key repo auctions today to manage short-term liquidity, absorbing funds from the market.
i. Overnight Repo Auction
Designed to manage immediate liquidity, the overnight repo auction saw the CBSL offer a substantial amount to the market:
- Amount Offered: Rs. 60,000 million
- Bids Received: Rs. 7,500 million
- Amount Accepted: Rs. 7,500 million
- Weighted Average Yield: 8.74%
- Minimum Accepted Rate: 8.74%
- Maximum Accepted Rate: 8.74%
The lower bids received compared to the amount offered suggests that commercial banks had ample overnight liquidity, reducing their immediate need for the CBSL’s repo facility. The uniform accepted rate further highlights the market’s current pricing for very short-term funds.
ii. Short Term Repo Auction
For slightly longer-term liquidity management, a 7-day short-term repo auction was conducted:
- Amount Offered: Rs. 20,000 million
- Bids Received: Rs. 15,000 million
- Amount Accepted: Rs. 15,000 million
- Weighted Average Yield: 8.75%
- Minimum Accepted Rate: 8.75%
- Maximum Accepted Rate: 8.75%
- Days to Maturity: 07
In this auction, the CBSL accepted a significant portion of the bids received, indicating a measured approach to absorbing liquidity for the coming week. The slightly higher yield compared to the overnight auction reflects the premium for extending the term of the funds.
Use of CBSL Standing Facilities
Further insights into system-wide liquidity come from the utilisation of the CBSL’s Standing Facilities:
- Standing Deposit Facility (SDF): Rs. 71,715 million
- Standing Lending Facility (SLF): Rs. 128 million
The substantial amount placed in the Standing Deposit Facility by commercial banks indicates an overall surplus of liquidity within the system. The minimal use of the Standing Lending Facility reinforces this picture, suggesting that banks generally have sufficient funds without needing to borrow from the CBSL at the higher lending rate.
CBSL Treasury Bill/Bonds Holdings
As part of its balance sheet management and capacity for future market interventions, the Central Bank’s holdings of Treasury Bills and Bonds stood at:
- Face Value: Rs. 2,492,619.35 million
- Book Value: Rs. 1,524,603.61 million
These holdings provide the CBSL with the necessary instruments to conduct future Open Market Operations, whether to inject or absorb liquidity, thereby safeguarding price stability and fostering a stable financial environment in Sri Lanka.
The daily OMOs are a critical tool for the Central Bank of Sri Lanka to signal its monetary policy stance and ensure the smooth functioning of the country’s financial markets, impacting everything from interbank lending rates to broader economic activity.
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