As Bangladesh edges towards the close of the calendar year, yields on government treasury bills are once again trending upwards, reflecting mounting pressures within the financial system. Analysts attribute this development to a combination of year-end liquidity constraints, a cautious stance adopted by commercial banks, and broader macroeconomic uncertainty. The upward movement is particularly pronounced in medium- and longer-term treasury bills, reigniting debate across the money market and among policy observers.
According to the latest auction results released by Bangladesh Bank on Sunday, the cut-off yield on the short-term 91-day treasury bill remained unchanged at 10.55 per cent. This stability suggests that banks continue to show solid appetite for short-tenor instruments, which allow them to deploy surplus funds without locking up liquidity for extended periods. However, the picture shifts markedly as maturities lengthen.
The yield on the 182-day treasury bill rose from 10.21 per cent to 10.57 per cent, while the 364-day bill edged higher to 10.70 per cent. Though the increase in the one-year bill may appear modest, market participants view it as a clear signal of reduced demand for longer-duration government securities at this juncture.
Through this particular auction, the government raised Tk 70 billion, funds that will be used to partially finance the ongoing fiscal deficit. Officials from the Ministry of Finance and Bangladesh Bank have reiterated that treasury bills remain a vital instrument of public debt management, especially in the latter part of the financial year when expenditure pressures typically intensify.
A senior Bangladesh Bank official explained that, with the 31 December year-end accounting deadline approaching, many commercial banks are reluctant to commit funds to longer-term treasury bills. From a balance-sheet perspective, banks prefer to preserve liquidity during this period, ensuring that their financial statements appear robust at year-end. As a result, demand for 182-day and 364-day bills weakens, pushing yields upwards.
Beyond seasonal factors, political and macroeconomic considerations are also shaping investment decisions. With the national parliamentary election scheduled for 12 February 2026, banks are exercising heightened caution. Anticipation of political uncertainty, coupled with existing economic challenges, has prompted a shift towards shorter-term and more liquid assets, at the expense of longer-term government paper.
Market analysts warn that treasury bill yields may remain elevated in the coming weeks unless there is a notable easing of liquidity conditions or a swift restoration of confidence within the banking sector. In the absence of such relief, medium- and long-term yields are likely to stay under upward pressure.
At present, the government regularly issues treasury bills of four maturities—14 days, 91 days, 182 days, and 364 days—through competitive auctions. Alongside these, five categories of government bonds, ranging from two to twenty years in tenor, are actively traded. Economists note that the current rise in yields reflects a delicate interplay between year-end financial pressures, election-related caution, and disciplined liquidity management by banks—underscoring the fine balance between the government’s financing needs and the broader stability of the banking sector.