BB mops up Tk 7.3b from market

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FE Report
The central bank withdrew Tk 7.32 billion from the banking system Monday using 30-day Bangladesh Bank Bills to mop up excess liquidity from the market, officials said.
The Bangladesh Bank (BB) accepted 20 bids worth Tk 7.32 billion at the second auction of the short-term monetary tool held in central bank on the day.
A total of 27 bidders offered bids worth Tk 12.12 billion for the bills, the central bank officials said.
The rate of weighted average yield, generally known as interest rate, of the accepted bids was 0.93 per cent per annum, they said.
"It is a temporary measure. When the market will move forward then the measure may be suspended," a BB senior official told the FE, adding that the central bank uses such monetary tool aiming to withdraw excess liquidity from the market.
The central bank moped up Tk 5.85 billion from the market on August 10 last through reintroducing of the auction of such bills as a monetary tool.
The treasury officials, however, urged the central bank to hold the auction of the special bill each day until the burden of excess liquidity exists.
"The BB should use the monetary tool every working day to mop up the excess liquidity from the market," a senior treasury official of a foreign commercial bank told the FE, preferring anonymity.
The central bank reintroduced 30-day and 91-day Bangladesh Bank Bills in October 2006 as the monetary policy instruments following decision that the government treasury bills and the bond auctions are exclusively used for the government debt management.
However, the auction of 91-day Bangladesh Bank Bill discontinued avoiding its duplication with 91-day Treasury bill from January 8, 2008. There was also no auction of 30-day Bangladesh Bank Bill from January 8, 2008, the central bank said.
Besides, the central bank has sold the government securities directly to the commercial banks aiming to pump out excess liquidity from the money market, officials said.
The central bank has taken the move against the backdrop of pilling up of excess liquidity in the banking sector to all-time high at Tk 347 billion in June 2009, registering a 165 per cent growth over that of the same period of the previous calendar year.
As part of the move, the BB sold treasury bills (T-bills) worth Tk 1.96 billion to three commercial banks directly two weeks back using its secondary window, they added.
Currently, three T-bills are being transacted through auctions to adjust the government borrowing from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, four government bonds -- 5-year, 10-year, 15-year and 20-year tenure -- are being traded