The yields on treasury bills (T-bills) increased further on Sunday as banks showed reluctance to invest their excess liquidity in the risk-free securities.
The cut off yield, generally known as interest rate, on the 91-day T-bills rose to 11.45 per cent on the day from 11.24 per cent of the previous level, while the yield on 182-day T-bills rose to 11.75 per cent from 11.45 per cent.
However, the yield on 364-day T-bills reached 11.86 per cent on the day from 11.75 per cent earlier, according to the auction results.
"The interest rates were fixed in line with the market requirement," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE) while explaining the higher yields on T-bills.
He also said upward trend of the government's bank borrowing has pushed up the yields on the T-bills.
The government is borrowing Tk 90 billion through the issuance of three types of T-bills in each weekly auction of April 2025, up from Tk 75 billion previously, the central banker explained.
As part of the strategy, the government borrowed Tk 90 billion on Sunday through issuing the T-bills to meet its budget deficit partly.
Currently, four T-bills are transacted through auction to adjust government borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
Talking to the FE, a senior treasury official at a leading private commercial bank said most banks have been reluctant to invest their excess funds in the government-approved securities due to the ongoing liquidity pressure in the market.
He added that the banks are currently watching the impact of the phasing out of the 28-day repo facility on the market.
The BB phased out its 28-day repo facility from April 10, aiming to reduce banks' reliance on central bank liquidity support and encourage them to manage their liquidity independently.
Furthermore, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
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