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Yields on treasury bills (T-bills) declined further on Sunday with banks channelling their excess liquidity into risk-free securities, amid subdued private-sector credit demand ahead of the upcoming polls.
The cut-off yield, generally known as interest rate, on the 91-Day T-bills fell to 10.14 per cent on the day from 10.42 per cent of the previous level.
The yield on 182-day T-bills also came down to 10.25 per cent from the previous 10.55 per cent.
Meanwhile, the yield on the 364-day T-bills decreased to 10.34 per cent from 10.66 per cent earlier, according to the auction results.
On the day, the government raised Tk 80 billion by issuing three types of T-bills to partially finance its budget deficit.
Earlier on January 04 last, the yields on T-bills had declined on the same grounds.
"Most banks are keen to invest their excess liquidity in the government securities as private sector credit demand remains subdued ahead of the upcoming national election," a senior Bangladesh Bank (BB) official told The Financial Express (FE), while explaining the latest market situation.
Meanwhile, the private sector credit growth stood at 6.58 per cent year-on-year in November 2025 from 6.23 per cent a month back, according to the central bank's latest figures.
Higher remittance inflows, along with the central bank's buying of US dollars, have helped enhance the market liquidity, putting downward pressure on yields on government securities, the central banker explained.
The central bank of Bangladesh has so far bought $3.75 billion directly from banks since July 13 last under the prevailing free-floating exchange rate arrangement, the BB data revealed.
The central banker also predicted that the existing trend in the yields on the government securities may continue in the coming weeks.
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.
Furthermore, five government bonds, with the tenures of two, five, 10, 15 and 20 years respectively, are traded in the market.
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