Excess liquidity in Sri Lanka's inter-bank markets have topped 20 billion rupees over the past three days easing tighter monetary conditions that prevailed a week earlier.

Excess liquidity rose to 26 billion rupees on Wednesday and remained at 21.8 billion rupees on Thursday.

Analysts have urged the Central Bank to kill excess liquidity coming from foreign exchange purchases by outright sales of its Treasury bill stock, to prevent them being loaned out and creating fresh import demand.

If 13.4 billion rupees of excess liquidity is killed, analysts say about 100 million dollars of what people call 'foreign exchange savings' can be achieved in the days and weeks ahead, allowing the monetary authority to strengthen the exchange rate.