Call money rate stable on banks’ excess liquidity

The inter-bank call money rate remained stable on Thursday, the last working day before the Eid-ul-Fitr festival, as most of the banks had excess liquidity, treasury officials said.

The call rate ranged between 5.25 per cent and 6.50 per cent on the day, unchanged from the previous level. However, most of the deals were settled at rates varying between 5.50 per cent and 6.0 per cent, they added.

Total turnover in the call money market came down to Tk 48.56 billion on Thursday, from Tk 50.38 billion of the previous working day, according to the latest central bank statistics.

"Nearly 20 banks are facing excess liquidity burden following suspension of treasury bonds auctions by the government in May and June," a senior treasury official of a leading private commercial bank explained.

He also said the central bank is withdrawing the excess liquidity from the market using its reverse REPO (repurchase agreement) auction tool.

The Bangladesh Bank (BB) withdrew Tk 119.94 billion at 5.25 per cent from the market through reverse REPO auction on Thursday. It was Tk 125.45 billion on Tuesday.

Most of the banks located at Motijheel, Dilkusha and other commercial places of the capital witnessed long queues of people, mostly waiting to withdraw money before the Eid festival.

Short-term borrowings normally increase before the Eid festival to meet the growing demand for cash from the bank clients.The call money rate started falling soon after the postponement of the treasury bonds auction on May 05, according to the market operators.

The call money rate came down to 6.25-8.00 per cent on May 05 from 6.50-8.00 per cent of the previous working day, they added.

Earlier on May 04, the government suspended the auction of treasury bonds for the months of May and June for proper cash management.

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