Yields on T-bills fall further

The yields on treasury bills fell further on Thursday as banks expressed willingness to invest their excess liquidity in the short-term securities.

The cut-off yield, generally known as interest rate, on the 91-day T-bills came down to 11.54 per cent on the day from 11.61 per cent while the yield on 182-day T-bills dropped to 11.64 per cent from 11.80 per cent. On the other hand, the yield on 364-day T-bills decreased to 11.64 per cent from 11.81 per cent, according to the auction results.

"Most banks prefer to invest their excess funds in government securities when liquidity inflows increase at the market," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE) while explaining the latest market situation.

The existing higher inflow of inward remittances and the central bank's purchase of US dollars from the market are contributing to the increased liquidity, he said. The banker also predicted that the existing trend of yields on T-bills may continue in the coming weeks.

On the day, the government borrowed Tk 75 billion through issuing three types of T-bills to meet its budget deficit partly. Currently, four types of T-bills with maturities of 14, 91, 182 and 364 days are auctioned to adjust government borrowings from the banking system.

The bills are short-term investment tools issued through auction conducted by the central bank on behalf of the government. Furthermore, five government bonds, with tenures of 2, 5, 10, 15 and 20 years, are traded on the market.

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