The yield on five-year Bangladesh Government Treasury Bonds (BGTBs) remained broadly steady on Tuesday, reflecting cautious market sentiment as the central bank continued its efforts to stabilise the exchange rate of the US dollar against the Bangladeshi taka.
According to auction results, the cut-off yield—commonly regarded as the effective interest rate—on the five-year bonds inched up slightly to 10.32 per cent, compared with 10.31 per cent in the previous auction. Analysts attributed the minimal change to subdued credit demand and ample market liquidity.
“Most banks are now allocating excess funds into government-approved securities, given that private sector credit demand has softened ahead of the forthcoming national election,” a senior official at Bangladesh Bank (BB) told The Financial Express.
The central bank’s ongoing foreign exchange interventions, including substantial purchases of US dollars, have helped maintain liquidity in the domestic financial system. According to the BB official, increased remittance inflows, coupled with these dollar purchases, have contributed to relatively stable yields on government debt instruments.
On Tuesday, the government raised Tk 20 billion through the issuance of BGTBs, partially aimed at financing its budget deficit. The auction attracted bids from a wide range of commercial banks, all of which sought to deploy excess liquidity in secure government securities amid muted private sector borrowing.
As part of its routine open market operations, Bangladesh Bank purchased an additional US$171 million from 11 commercial banks via an interbank spot market auction, underlining its commitment to smoothing exchange rate volatility.
Summary of Tuesday’s BGTB Auction and Central Bank Dollar Purchase
| Instrument | Amount Raised (Tk) | Cut-off Yield (%) | Central Bank Dollar Purchase (US$ million) | Notes |
|---|---|---|---|---|
| Five-year BGTBs | 20 billion | 10.32 | 171 | Auction attracted strong bids amid low private credit demand |
| Central Bank FX Intervention | – | – | 171 | Purchased from 11 banks to support USD/BDT rate |
Market observers note that while yields on government bonds have remained relatively stable, continued close monitoring of liquidity flows and foreign exchange interventions will be critical in the weeks leading up to the national election. The combination of ample liquidity and cautious investor sentiment suggests that the government securities market may see limited volatility in the short term.