Interest rates continued their breath-taking plunge yesterday in the face of the fast-deepening recession, as the average return on Treasury bills fell further in the government's latest auction.

Yesterday's results showed the rate for 13-week bills dipped to 6.369 percent, compared to 6.5 percent at the previous auction June 6 -- the lowest yield on any similar short-term borrowing since a 6.318 percent rate on May 15, 1978.

For 26-week bills, the yield rate plunged to 6.662 percent, from 6.935 before -- its lowest level since a 6.563 percent rate on April 17, 1978.

Yesterday's declines came despite higher-than-expected government borrowing requirements, the result of a gradually re-expanding budget deficit in the face of a worsening recession.

Interest rates have been plummeting since their peak in late March and early April.

In its latest auction, the Treasury received $6.21 billion in bids on its 13 -- week bills and accepted $3.9 billion. The rates ranged from 6.270 percent to 6.409 percent.

For 26-week bills, the agency received $7.33 billion in bids and accepted $3.9 billion, at rates between 6.642 percent and 6.674 percent.

The figures for the auction of 13-week bills included $572.7 million in noncompetitive bids at the average return. The Treasury accepted 43 percent of bids at the highest return. The coupon equivalent rate was 6.56 percent.

The yields for 26-week bills included $220.9 million in noncompetitive bids at the average return. The coupon equivalent rate was 6.99 percent. Some 53 percent of bids were accepted at the highest return.