The yields on two types of Treasury Bills (T-bills) dropped further on Sunday as banks preferred to invest their excess funds in the risk-free government securities.
The cut-off yield, generally known as interest rate, on 91-day T-bills came down to 0.84 per cent on the day from 0.94 per cent of the previous auction held on October 18.
On the other hand, the yield on 182-day T-bills also fell to 1.35 per cent on the day from 2.00 per cent earlier, according to the auction results.
By issuing the T-bills on Sunday, the government borrowed Tk 17 billion to meet its budget deficit partly.
The falling trend in yields on T-bills and bonds may continue until mop up the excess liquidity from the market by the central bank using its monetary instruments, according to market operators.
The overall excess liquidity with the commercial banks hit an all-time high of around Tk 1.60 trillion in August 2020 from Tk 1.41 trillion a month before.
The demand for such securities has increased gradually mainly due to lower interest rates on call money in the inter-bank market along with inter-bank repo, they explained.
Talking to the FE, a senior official of the Bangladesh Bank (BB) said the central bank is injecting fresh funds using different windows to help the scheduled banks in implementing the government-announced stimulus packages to gear up the recovery of the pandemic-hit economy.
"Right now, the BB is unwilling to mop up the excess liquidity from the market," the central banker said while replying to a query.
Considering lower yields on the government securities, the BB official advised the banks to invest more in different sectors, particularly productive ones instead of investing funds in the securities.
Currently, three T-bills are being transacted through auctions to adjust government borrowings from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds with tenures of 02, 05, 10, 15 and 20 years respectively are traded on the money market.
© 2024 - All Rights with The Financial Express
