Pre-Eid cash withdrawal drives call money rate up

The inter-bank call money rate moved slightly up this week mainly due to higher occasional withdrawal of liquid money from the banks ahead of the Eid-ul-Azha.
The rate ranged between 4.0 per cent and 4.5 per cent on Thursday, the last working day before starting the Eid holidays, than that of the previous week's range between 1.8 per cent and 4.5 per cent.
"Actually, the call money rate showed an upward trend since Tuesday and continued until Thursday," a senior treasury official told the FE.
Earlier on Tuesday, the call money rate ranged between 2.0 per cent and 4.5 per cent.
However, the weighted average rate (WAR) rose to 4.06 per cent on Thursday from 3.84 per cent on August 24, according to a senior official of Bangladesh Bank (BB).
"The rate remained unchanged on Thursday from the previous working day," he said.
He added that the overall turnover in the call money market also increased slightly in the last working day before the vacation.
The volume of overall transactions in the market reached at maximum Tk 89.96 billion on August 29 and Tk 84.74 billion on August 30.
"There is no liquidity problem right now. So the call money rate remained stable despite higher withdrawal of cash from the banks ahead of the Eid," said the central banker.
A senior treasury official of a leading private commercial bank (PCB) said most of the banks earlier taken necessary measures with holding adequate liquidity to face pre-Eid withdrawal pressure.
The overall excess liquidity position in the banking sector still remained at a satisfactory level that helped stabilise the money market despite higher withdrawal of cash, he said. "Such short-term borrowings normally go up before Eid."
Meanwhile, the volume of excess liquidity rose to Tk 1.10 trillion as on July 20 from Tk 1.06 trillion in the last week of June, according to the central bank officials.
However, the excess reserves, generally known as excess over daily minimum cash reserve requirement (CRR) with the central bank, rose to around Tk 50 billion during the period under review from Tk 45 billion.
"The upward trend in the overall excess liquidity in the banking sector may continue in the near future," said the central banker.
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