Written by The Banking Post
The yield on Bangladesh’s 10-year treasury bonds slipped on Tuesday as Bangladesh Bank’s fresh purchase of US dollars injected additional liquidity into the banking system, easing pressure on government securities.
Auction results showed the cut-off yield on 10-year Bangladesh Government Treasury Bonds (BGTBs) fell to 10.49 per cent from 10.87 per cent earlier.
Market participants said banks are increasingly channeling surplus funds into government securities as private-sector credit demand remains subdued ahead of the national elections. Higher remittance inflows, along with the central bank’s continued dollar purchases, have also boosted overall liquidity, putting downward pressure on bond yields.
Officials indicated the softer yield trend could persist in the near term if current liquidity conditions continue.
On the day, the government raised Tk 30 billion by issuing treasury bonds to partially finance its budget deficit.
The easing of yields followed Bangladesh Bank’s purchase of an additional US$45 million from two banks through an interbank spot market auction. The transaction was conducted under the multiple price auction method, with a cut-off rate of Tk 122.30 per dollar, as part of efforts to stabilise the dollar–taka exchange rate.
So far, the central bank has bought US$3.88 billion directly from banks since July last year under the free-floating exchange rate regime. Officials said the intervention is aimed at smoothing exchange rate volatility, supporting export competitiveness and remittance inflows, while gradually rebuilding foreign exchange reserves.
Reflecting the recent inflows, gross foreign exchange reserves rose to US$32.62 billion as of January 15, up from US$32.44 billion a week earlier under the traditional calculation method. Under the IMF’s BPM6 standard, reserves increased to US$28.03 billion from US$27.84 billion over the same period.
