The inter-bank call money market did not show Monday the faintest sign of volatility though the celebration of Eid-ul-Azha, the second largest religious festival of the Muslims, remained only days away.
Banks' treasury officials attributed the lack of volatility in call money market to the presence of substantial volume of excess liquidity in the banking system.
The call rates remained unchanged on Monday at the previous day's levels, ranging between 5.25 per cent and 6.50 per cent. However, most of the deals were settled at rates varying between 5.50 per cent and 6.0 per cent, bank officials concerned said.
"Around 10 commercial banks are still heavily burdened with excess liquidity because of lower credit demand from the businesses engaged in both trade and industrial operations," a senior treasury official of a leading private commercial bank explained.
He also said the call money rate is unlikely to rise ahead of the Eid festival despite higher withdrawal of cash from the banks.
Such short-term borrowing by cross sections of people normally increases before Eid, the banker added.
Meanwhile, the overall excess liquidity with the commercial banks stood at around Tk 1.20 trillion as of August 15 last but major portion of the funds has been invested in the risk-free government securities, a senior official of the Bangladesh Bank (BB) said.
He also said the excess reserve, generally known as excess over daily minimum cash reserve requirement (CRR) with the central bank, stood at around Tk 37 billion.
On the other hand, the central bank was slow in mopping up the excess funds from the market through reverse REPO (repurchase agreement) auction Monday to keep the call money rate stable.
The BB withdrew Tk 69.33 billion at 5.25 per cent from the market through reserve REPO auction Monday. It was Tk 78.44 billion on the previous day.
On the other hand, the central bank purchased US$80 million from seven banks Monday to help keep the inter-bank foreign exchange (forex) market stable ahead of the Eid.
The BB has been purchasing the US dollar from the banks continuously to protect the interests of exporters and migrant workers by keeping the exchange rate of local currency against the greenback stable.
A total of $1.56 billion was bought from the commercial banks between July 2 and September 21 of the current fiscal year (FY) 2015-16 for offsetting its increased supply to the market.
"We may continue buying of the greenback from the banks in line with the market requirement," another BB official hinted.
Bangladesh's foreign exchange reserve rose to $26.15 billion Monday from the previous day's level of $26.06 billion.
siddique.islam@gmail.com
All quiet in call money market
Siddique Islam | Published: September 22, 2015 00:00:00 | Updated: November 30, 2024 06:01:00
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