Written by The Banking Post
Treasury bill (T-bill) yields edged down on Sunday as improved liquidity conditions encouraged banks to park excess funds in risk-free government securities, market participants said.
The government raised Tk 70 billion through auctions of three tenors of T-bills to partly finance its budget deficit. The cut-off yield on the 91-day T-bill slipped to 10.52 per cent from 10.53 per cent previously. The yield on the 182-day bill remained almost unchanged at 10.65 per cent, while the 364-day bill eased to 10.71 per cent from 10.72 per cent.
Bankers attributed the softer yields to lower private sector credit demand and fresh liquidity injections following the central bank’s purchase of US dollars from the market.
“Most banks preferred to invest their excess liquidity in risk-free securities as private sector credit demand remains subdued ahead of the national polls,” said a senior treasury official at a leading private commercial bank.
Private sector credit growth slowed to 6.23 per cent year-on-year in October 2025 from 6.29 per cent a month earlier, reflecting cautious business sentiment and tighter lending conditions.
On the same day, the Bangladesh Bank bought an additional $115 million from three banks through the interbank spot market under a multiple price auction, at a cut-off rate of Tk 122.30 per dollar. The move was aimed at stabilising the exchange rate and injected local currency liquidity into the banking system.
“Central bank dollar purchases are boosting liquidity in the market, which is helping to pull down yields on government securities,” the treasury official added, forecasting that the current trend may continue in the coming weeks.
Since July 13, the central bank has purchased $3.05 billion directly from banks under the prevailing free-floating exchange rate regime.
“We are buying dollars from scheduled banks to keep the exchange rate stable, support export competitiveness and sustain remittance inflows,” a senior central bank official said.
The official noted that such operations have also improved the liquidity position of several banks, including weaker ones, and are contributing to a gradual strengthening of foreign exchange reserves.
Bangladesh’s gross foreign exchange reserves rose to $32.80 billion on December 24 from $32.72 billion two days earlier under the traditional calculation method. Under the IMF’s BPM6 methodology, reserves increased to $28.11 billion from $28.04 billion over the same period.
