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Yields on treasury bills (T-bills), particularly those of longer tenures, rose on Sunday as banks appeared increasingly reluctant to invest their surplus liquidity in government securities ahead of the upcoming national elections.
The cut-off yield on the 182-day T-bills climbed to 10.30 per cent from 10.00 per cent, while the 364-day T-bill yield increased slightly to 10.04 per cent from 9.99 per cent.
In contrast, the 91-day T-bill yield fell to 10.09 per cent from 10.24 per cent, reflecting short-term adjustments in investor preference and liquidity management, according to the latest auction results.
On the day, the government borrowed Tk 75 billion by issuing three types of T-bills to partly meet its budget deficit.
"Most banks are reluctant to park their excess funds in long-term T-bills as they prefer to manage liquidity more efficiently ahead of the upcoming national election," a senior Bangladesh Bank (BB) official told The Financial Express, explaining the current market behaviour.
The central banker added that the existing trend in yields on government securities is likely to continue in the coming weeks.
"It's essentially a market correction aimed at aligning yields with the central bank's policy rate," said a senior treasury official at a leading private commercial bank (PCB).
The policy rate, also known as the repo rate, currently stands at 10 per cent.
At present, four categories of T-bills are traded through auctions to manage the government's borrowing from the banking system, with maturities of 14, 91, 182, and 364 days.
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