The central bank did not accept any bid from the auction of its two-type Bangladesh Bank (BB) bills on Monday as bidders quoted higher yields on the instruments, officials said.
"No bid was accepted from Monday's auction," a top central banker told the FE while replying to a query.
The bidders quoted significantly higher yields on the bills compared to the previous auctions, he explained.
At the auction, the bidders quoted the yield on seven-day BB bills at maximum 1.50 per cent while that on 14-day BB bills at around 2.0 per cent.
On August 09, the cut-off yield, generally known as interest rate, on seven-day bills was fixed at 0.54 per cent and that on 14-day was 0.75 per cent.
"The bidders should quote market-oriented yields on the BB bills," the central banker said, adding that the next auction is scheduled for Monday.
The central bank has so far mopped up Tk 86.75 billion from the market through issuing its bills as announced in the calendar.
It restarted mopping up excess liquidity from the market on August 09 after over three years' suspension through auctioning its bills to ensure proper liquidity management in the banking system.
"We'll continue our initiative to mop up liquidity from the market to bring down the amount of excess funds at an acceptable level from existing position on the same," another central banker said.
Banks' surplus liquidity hit an all-time high of Tk 2,315 billion as of June 30 this calendar year, fuelled by lower private credit growth in a sign that the investment situation has cooled.
Expansionary monetary policy, coupled with the execution of the government's stimulus packages, has driven up liquidity in banks, according to bankers.
They say injecting fresh funds by the central bank into the market through purchasing US currency from banks continuously has also pushed up excess liquidity.