Yields on Treasury bills (T-bills) showed a mixed trend on Sunday as banks channelled their excess liquidity into short-term government securities rather than longer-tenure ones amid heightened caution ahead of the upcoming national election.
The shift reflects banks' preference for shorter maturity periods in managing risk and maintaining flexibility in uncertain political and economic conditions.
The cut-off yield, generally regarded as the interest rate, on the 91-day T-bill fell to 9.69 per cent from 9.91 per cent previously.
Conversely, the yield on the 182-day T-bill rose to 9.89 per cent from 9.79 per cent, while the yield on the 364-day T-bill inched up to 9.70 per cent from 9.68 per cent, according to the auction results released by Bangladesh Bank.
On the day, the government raised Tk 65 billion through the issuance of three types of T-bills to partly finance its budget deficit.
"Most banks are opting to invest their excess liquidity in shorter-tenure instruments rather than longer-term ones, reflecting cautious portfolio positioning ahead of the national election," a senior official of Bangladesh Bank (BB) told The Financial Express while explaining the market dynamics.
The central banker predicted that the current trend in government securities yields may persist in the coming weeks.
Earlier, on September 28, yields on T-bills had fallen below the central bank's policy rate as banks sought safe investment options for their surplus funds amid subdued private credit demand before the election.
At that time, the yield on the 91-day T-bill fell to 9.91 per cent from 10.00 per cent, while the yield on the 182-day T-bill dropped to 9.79 per cent from 9.91 per cent. The yield on the 364-day T-bill also declined to 9.68 per cent from 9.88 per cent.
Currently, Bangladesh Bank's policy rate, also known as the repo rate, stands at 10 per cent.
Meanwhile, private sector credit growth remained sluggish, reaching 6.52 per cent in July 2025 on a year-on-year basis, compared to 6.49 per cent in June, reflecting weak business confidence and tighter lending conditions.
At present, four types of Treasury bills are auctioned to adjust the government's borrowing from the banking system. These have maturity periods of 14, 91, 182 and 364 days.
In addition, five government bonds, with maturities of two, five, 10, 15 and 20 years respectively, are also
traded in the market.
siddique.islam@gmail.com