Strong Remittance Growth Continues as Treasury Bill Yields Fall Under 8 Percent
Inflows reached $9.581 billion in the first 102 days of fiscal 2026-27, while surplus bank liquidity and weak credit demand drove down short-term government borrowing costs.
Bangladesh's external and domestic financial indicators have moved in contrasting yet related directions in recent weeks. Workers' remittances have maintained solid growth, while short-term government borrowing costs have dropped to multi-year lows. According to central-bank data, remittance inflows reached $9.581 billion in the first 102 days of fiscal year 2026-27 (1 July to 10 October), marking a 12.3 percent increase from the same period a year earlier. At the same time, yields on Treasury bills declined below 8 percent across all three standard maturities for the first time in three years.
The remittance figures provide clear support for the country's foreign-exchange position. In the first ten days of October alone, expatriates sent approximately $990 million through formal channels, continuing the positive trend observed since the start of the fiscal year.
These inflows have helped keep gross foreign-exchange reserves around $36 billion, or roughly $31 billion under the stricter IMF BPM6 definition. Steady remittance receipts ease pressure on the balance of payments, support the exchange rate, and give receiving households additional purchasing power that circulates through the domestic economy.
The decline in Treasury-bill yields reflects conditions inside the banking system. In the latest auction, rates on three-month, six-month, and one-year bills all settled below 8 percent—the lowest levels recorded in three years. Analysts and market participants attribute the drop primarily to surplus liquidity held by stronger commercial banks and persistently weak demand for private-sector credit. When businesses and households borrow less, banks have fewer high-yielding opportunities and therefore bid more aggressively for government securities, pushing yields downward.
The coexistence of robust remittance inflows and soft private credit is instructive. Remittances add foreign currency that banks convert into taka, increasing domestic liquidity. Yet this extra liquidity has not produced a broad recovery in lending. Structural weaknesses in parts of the banking sector, elevated non-performing loans at some institutions, and cautious business sentiment linked to energy constraints and higher costs appear to be restraining credit growth. Consequently, the government can raise short-term funds at lower interest rates, which reduces immediate financing costs, while the private sector continues to show limited appetite for new borrowing.
For economic managers, the two developments offer both comfort and a signal for further action. Reliable remittance growth strengthens reserve buffers and reduces near-term reliance on more expensive external financing. Cheaper Treasury-bill yields also lower the government's interest burden on new short-term debt. At the same time, the weakness in private credit indicates that liquidity is not yet flowing freely into productive investment. Restoring confidence in the banking system and addressing the factors that discourage borrowing will be necessary if the extra liquidity generated by remittances is to support faster economic activity rather than remaining concentrated in government paper.
Overall, the latest data depict an external sector that continues to benefit from expatriate earnings and a domestic money market shaped by cautious private-sector behaviour. Maintaining the formal-channel remittance momentum and gradually reviving healthy credit demand will both matter for macroeconomic stability in the coming months. The combination of strong inflows and falling short-term yields provides useful breathing room, yet it also highlights the ongoing need to strengthen the financial system and encourage private investment.