Dhaka, Bangladesh (BBN) - The interest rate on treasury bills (T-bills) increased slightly on Sunday, as the commercial banks appear to be more interested to invest in the government securities at higher yield.
The yield, generally known as interest rate, on 182-day T-bill rose to the range of 5.65-5.66 per cent Sunday from 5.59-5.60 percent of the previous auction, held on March 6 last, according to auction results.
"The interest on T-bills has been fixed in line with the market demand," a senior official of the Bangladesh Bank (BB) said, adding that the BB has given a signal through increasing policy interest rates to the banks for reducing dependence on borrowing from the central bank.
On Thursday, the central bank increased its policy interest rates by fifty basis points after nearly eight months to curb inflationary pressures on economy.
The interest rate on repurchase agreement (repo) was re-fixed at 6.0 percent on Thursday from 5.50 percent while the reverse repo rate was increased to 4.0 percent from 3.50 percent.
Currently, three T-bills are being transacted through auctions to adjust the government borrowings from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, four government bonds with 5-year, 10-year, 15-year and 20-year periods are being traded in the markets.
BBN/SSR/AD-14Mar11-1:43 am (BST)