Call money market stable ahead of festival time

The inter-bank call money market was almost stable ahead of the Eid-ul-Fitr festival, helped by coordinated efforts of the government and the central bank.
The call money rate remained unchanged Wednesday-between 3.75 per cent and 5.0 per cent-from the previous level.
But most of the deals were settled at rates varying between 4.50 per cent and 5.00 per cent, according to market operators.
"The market situation was almost unchanged on Thursday from the previous level," a senior official of the Bangladesh Bank (BB) told the FE.
The country's money market is still liquid as a substantial amount of fund has been deposited with some banks against cash incentives for apparel and other sectors, banking sector insiders said.
The government has released the 4th installment of cash incentives amounting to Tk 11.19 billion for disbursement among major exporters for the fiscal year (FY) 2018-19.
The fund will be distributed among the exporters for the period of April-June, 2019.
Besides, a significant amount of fund the government released for the implementation of annual development programme has already been disbursed, they added.
At the same time, the central bank has continued to inject funds into the market through repo auction and pledged liquidity support (ALS) to both primary dealer (PD) banks and non-PD banks.
As part the of the move, the BB injected fresh fund amounting to around Tk 230 billion into the market in the forms of repo and ALS on Thursday in line with the banks' requirements.
"We've provided fund to the banks on a regular basis aiming to keep the market stable before the Eid vacation," another BB official noted.
The central bank has already devolved a substantial amount of fund by itself, which also helped push up money supply in the market, the central banker said.
The overall money supply has increased in recent days, though some banks were reluctant to lend their excess fund to other banks through call money market due to lower interest rates.
The banks prefer to invest their fund in other forms like short-term deposit to other cash-hungry banks instead of call money lending, the market insiders added.
The volume of overall transactions in the market rose to Tk 69.54 billion on May 29 from Tk 52.64 billion on May 23, according to the central bank's latest statistics.
However, the weighted average rate on call money rose to 4.55 per cent Wednesday from 4.45 per cent of the previous working day, the latest statistics show.
The call money rate has maintained an upward trend in recent days due mainly to higher withdrawal of cash money from the banks ahead of the Eid-ul-Fitr festival.
Most of the bank branches in Motijheel, Dilkusha and other commercial areas of the capital saw people queue up for withdrawing money.
Such a short-term borrowing normally gets accelerated before the festivals as demand for cash grows.

siddique,[email protected]