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The government borrowed Tk 50 billion through a special auction of 91-day treasury bills (T-bills) on Wednesday to partially finance its budget deficit.
The cut-off yield, commonly referred to as the interest rate, on the 91-day T-bills rose to 10.55 per cent, up from 10.26 per cent at the previous auction, according to the auction results.
"The upward trend in government borrowing from the banking system has pushed up yields on T-bills," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE) while explaining the latest market situation.
The central banker said the central bank's intervention in the foreign exchange market, particularly through the purchase of US dollars from commercial banks, has also helped keep yields at a reasonable level.
On Tuesday, the BB purchased a further US$202 million from 13 banks through an auction in the interbank spot market, aiming to stabilise the exchange rate of the US dollar against the local currency.
The amount was bought under the multiple-price auction method at a cut-off rate of Tk 122.29 per dollar.
Earlier, on November 27, the government borrowed Tk 50 billion from commercial banks through another special auction of five-year treasury bonds for the same purpose.
The Bangladesh Bank official also predicted that the existing yield trend in government securities could continue in the coming weeks.
Currently, four types of T-bills - 14-day, 91-day, 182-day and 364-day maturities - are transacted through auctions to manage government borrowing from the banking system.
In addition, five government bonds with tenures of two, five, 10, 15 and 20 years are traded in the market.
siddique.islam@gamial.com