Trading in Treasury bonds has surged on the Dhaka Stock Exchange, with monthly turnover increasing by 260 times to Tk 373.41 million between October 2022 and October 2023. The rising interest rates, driven by the Bangladesh Bank to curb inflation, have led banks to liquidate assets and invest in new bonds offering higher yields.
Provident funds, insurance companies, and mutual funds are diverting investments from the stagnant stock market and fixed-deposit receipts to risk-free, high-return T-bonds. Despite a conducive climate, the growth of the secondary bond market is slower than expected, with brokers citing a lack of incentives. The central bank data shows secondary trading of T-bills and T-bonds amounted to Tk 1.39 trillion in the first eleven months of 2023, compared to Tk 1.13 trillion in the same period in 2022.
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