Yields on treasury bills (T-bills) increased further on Sunday, as banks expressed their unwillingness to invest excess liquidity in the securities ahead of the upcoming Eid festival.
The cut-off yield, generally known as interest rate, on the 91-day T-bills rose to 10.90 per cent from 10.75 per cent of the previous level.
On the other hand, the yield on 182-day T-bills reached 11.25 per cent from 10.90 per cent from its earlier level.
The yield on 364-day T-bills increased to 11.30 per cent on the day from 11.09 per cent earlier, according to the auction results.
"Most banks are not interested in investing their excess funds in the government-approved securities before the Eid-ul-Fitr festival," a senior official of the Bangladesh Bank (BB) told the FE.
While explaining the upward trend of yields on T-bills, he said the banks wanted to manage their funds efficiently before and after the Eid.
However, the government borrowed Tk 70 billion on the day through issuing three-type T-bills to partially meet its budget deficit.
Talking to the FE, a senior treasury official at a leading private commercial bank said the ongoing upward trend of yields on T-bills might continue in the coming months.
"Liquidity pressure on the market may intensify in the near future as the central bank is set to phase out the 28-day tenure repo facility after the Eid vacation," explained the official.
Currently, four T-bills are transacted through auctions to adjust government borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods. The bills are short-term investment tools issued through auctions, conducted by the BB on behalf of the government.
On March 18, the yield on 10-year Bangladesh Government Treasury Bonds (BGTBs) crossed 12 per cent on the same ground.
The cut-off yield on BGTBs rose to 12.05 per cent on the day from 10.32 per cent earlier.
Furthermore, five government bonds, with the tenure of two, five, 10, 15 and 20 years respectively, are traded on the market.
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