T-bill Yields Ease Amid Rising Market Liquidity

Dhaka, 29 December 2025 – Treasury bill (T-bill) yields in Bangladesh displayed a modest decline on Sunday, reflecting increased liquidity within the banking sector. Short-term government borrowing costs eased slightly as commercial banks found themselves with additional funds, reducing pressure on interest rates. Market analysts attribute the shift primarily to the central bank’s proactive intervention in the foreign exchange market, which has bolstered banking liquidity.

During the weekly auction, the government raised a total of BDT 70,000 crore by offering 91-day, 182-day, and 364-day T-bills. Auction results indicated a one basis point reduction in yields for the 91-day and 364-day bills compared with the previous auction, while the 182-day bill yield remained unchanged. Bankers view the development as a positive signal, especially following several weeks of elevated interest rates.

Treasury officials noted that subdued demand for private sector credit and cautious lending behaviour among banks contributed to the easing of yields. With national elections approaching, businesses have delayed investments, resulting in lower credit uptake. Consequently, excess liquidity has been channelled into safe government securities, gently pushing down T-bill yields.

A key factor underpinning liquidity growth has been the central bank’s recent US dollar purchases. On Sunday, Bangladesh Bank acquired USD 115 million from three commercial banks at an average rate of BDT 122.30 per dollar. The infusion of local currency has eased cash pressure within the banking system, exerting downward pressure on short-term rates.

A senior banking official commented, “In an environment of low credit demand and limited risk appetite, T-bills remain the safest and most convenient investment for banks.”

Data from Bangladesh Bank showed that annual growth in private sector credit slowed slightly to 6.23% in October 2025, compared with 6.29% in September. Since 13 July, under the free-floating exchange rate framework, the central bank has purchased a cumulative USD 3.05 billion from the market to maintain export competitiveness, support remittance inflows, and ease liquidity stress among weaker banks.

Foreign exchange reserves have also risen steadily. As of 24 December, reserves stood at USD 32.80 billion under conventional accounting, up from USD 32.72 billion two days earlier. Using IMF BPM6 methodology, reserves increased to USD 28.11 billion.

Analysts suggest that if liquidity remains abundant and private sector credit demand does not accelerate, yields on government securities may continue to soften in the near term.

Key Indicators of T-bill Market

Overall, ample liquidity, subdued private credit demand, and central bank interventions have kept Bangladesh’s T-bill market in a soft-interest environment.