Bangladesh’s treasury bill (T-bill) market showed clear signs of easing on Sunday, as improved liquidity conditions in the banking system softened short-term government borrowing costs. Market participants attributed the change primarily to the central bank’s active intervention in the foreign exchange market, which injected fresh taka liquidity and reduced pressure on short-term interest rates.
At the weekly auction, the government raised a total of Tk 70 billion through the issuance of 91-day, 182-day and 364-day T-bills. The results indicated a modest but notable shift: the cut-off yields on the 91-day and 364-day bills each declined by one basis point compared with the previous auction, while the yield on the 182-day bill remained unchanged. Bankers viewed this outcome as a positive adjustment following several weeks of elevated yields driven by tighter liquidity.
According to treasury officials, the easing trend reflects subdued private-sector credit demand and a more cautious lending stance among banks. With businesses delaying investment decisions amid heightened uncertainty ahead of the national election, banks are finding fewer opportunities to deploy funds in higher-risk lending. As a result, surplus liquidity is increasingly being channelled into risk-free government securities, pushing T-bill yields marginally lower.
A major driver of the improved liquidity has been Bangladesh Bank’s recent purchases of US dollars from the interbank market. On Sunday, the central bank bought an additional US$115 million from three commercial banks through a multiple-price auction, setting a cut-off rate of Tk 122.30 per dollar. By supplying taka in exchange for dollars, the central bank eased cash pressures in the banking system, which in turn exerted downward pressure on short-term interest rates.
A senior treasury official at a leading private bank noted that T-bills currently offer an attractive combination of safety and stable returns. “In an environment where loan growth is weak and risk appetite is low, treasury bills have become the most secure and convenient investment option for banks,” he said.
Central bank data underline this broader slowdown in credit activity. Private-sector credit growth fell to 6.23 per cent in October 2025, down slightly from 6.29 per cent in the previous month, signalling continued caution in the real economy. Since the introduction of a freely floating exchange rate regime on 13 July, Bangladesh Bank has purchased a cumulative US$3.05 billion from the market, aiming to stabilise the exchange rate, support export competitiveness, sustain remittance inflows and ease liquidity stress in weaker banks.
These interventions have also supported foreign exchange reserves. As of 24 December, reserves under the conventional accounting method rose to US$32.80 billion, up from US$32.72 billion two days earlier. Under the IMF’s BPM6 methodology, reserves increased to US$28.11 billion over the same period.
Bankers expect that if liquidity remains comfortable and private-sector credit demand does not recover strongly, yields on government securities are likely to stay on a softer trajectory in the near term.
Snapshot of Key Indicators
| Indicator | Latest | Previous |
|---|---|---|
| 91-day T-bill yield | 10.52% | 10.53% |
| 182-day T-bill yield | 10.65% | 10.65% |
| 364-day T-bill yield | 10.71% | 10.72% |
| Total T-bills issued | Tk 70 billion | — |
| Daily dollar purchase (BB) | US$115 million | — |
| Total dollar purchase (since 13 July) | US$3.05 billion | — |
| Foreign reserves (conventional) | US$32.80 billion | US$32.72 billion |
| Reserves (IMF BPM6) | US$28.11 billion | US$28.04 billion |
Overall, a combination of ample liquidity, subdued credit demand and proactive central bank market management has helped sustain a softer yield environment in Bangladesh’s treasury bill market.