The Public Debt Department of Central Bank had offered maturing Treasury bills totalling Rs. 15 billion at yesterday’s primary market auction. Bids received amounted to Rs. 20.6 billion of which only Rs. 6.46 billion was accepted.
The three-month Treasury bill yields increased to 9.22 percent, up 6bps from 9.16 percent a year earlier while the six month yield rose 10bps to 10.25 percent from 10.15 percent a week ago. The 12-month Treasury bill yield increased to 11.26 percent yesterday, up 7bps from 11.19 percent a week earlier.
Dealers said it was not clear whether the Central Bank absorbed the balance Treasury bills, printing money in the process equal to that balance of Rs. 8.54 billion.
"The increase in yields was expected. It probably would have gone up further, but it was not allowed considering many of the bids were rejected. One good sign, however, is that there was no intervention to keep yields low or stable," one dealer said.
The rupee continued to weaken against the US dollar closing at Rs. 126.75/78 against the greenback on Wednesday (20) from an opening position of Rs. 126.55/60. Currency dealers said some seasonal demand was evident in view of the April festive season.