The yield on five-year Bangladesh Government Treasury Bonds (BGTBs) declined further on Tuesday, as banks opted to channel their excess liquidity into the risk-free instruments.
The cut off yield, generally known as the interest rate, on the BGTBs came down to 10.03 per cent on the day from 10.28 per cent earlier, according to auction results.
Earlier on August 12 last, the yield on five-year BGTBs fell to 10.28 per cent from 11.05 per cent on the same ground.
However, the government borrowed Tk 20 billion on the day through issuing the BGTBs to meet its budget deficit partially.
"Some banks have recently shown greater interest in investing their surplus funds in government-approved securities, encouraged by rising liquidity inflows into the market," a senior Bangladesh Bank (BB) official told The Financial Express (FE) while explaining the latest market development.
Market interventions by the BB, through purchasing American dollars from banks, have helped increase liquidity inflows into the market, the central banker explained.
The central bank purchased an additional US$265 million more from 17 banks through an auction on Tuesday, as part of its ongoing intervention in the foreign exchange market to maintain exchange rate stability. The central banker also predicted that the existing trend of yields on government securities might continue in the coming weeks.
Currently, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
Besides, four treasury bills (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.
siddique.islam@gmail.com
