Written by The Banking Post
The government borrowed Tk 50 billion in a single day on Wednesday through a special auction of 91-day treasury bills, as it moved to bridge its budget deficit.
The increased demand for funds pushed the yield on the short-term government securities up to 10.04 per cent, from 9.85 per cent earlier, according to auction results.
Officials said the rise reflects a recent spike in government borrowing. “The yield increased as multiple auctions were held within a short period this month,” a senior central bank official said.
Market participants echoed the trend, noting that heavier government borrowing from banks has put upward pressure on yields. In addition to Wednesday’s auction, the government raised another Tk 100 billion through two special auctions in recent days.
Analysts linked the increased borrowing needs to higher public spending, partly driven by the economic impact of the ongoing Middle East conflict.
“The situation has added pressure on budgetary expenditures, prompting the government to rely more on domestic borrowing,” a treasury official at a private commercial bank said.
The developments signal tightening liquidity in the banking system, as rising yields reflect stronger competition for funds between the government and private sector borrowers.
