Call money rate steady despite BB cash withdrawals
Saturday, 10 November 2007
Sarwar Zahan
The inter-bank call money rate remained steady last week although the central bank withdrew cash through reverse repurchase agreement (repo), treasury bills, Bangladesh Bank (BB) bills and Bangladesh Government Treasury (BGT) bonds, fund managers said.
The market experienced adequate liquidity to meet the strong demand for cash in an active market influencing the call rate to retain its earlier trend, they said.
The rate fluctuated between 6.50 per cent and 10.00 per cent maintaining the previous week's range. In most deals, the rate, however, moved between 6.50 per cent and 6.75 per cent against the previous week's range between 6.50 per cent and 6.70 per cent.
The call rate remained above the bank rate of 5.00 per cent in all transactions confirming higher than expected pressure on liquidity, fund managers said.
The rate rose to its high at 10.00 per cent adhering to the previous week's peak. The rate moved above the trend with some non-banking financial institutions borrowing cash at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The market experienced reasonable pressure on liquidity throughout the week, they said.
The central bank withdrew about Tk 40 billion from the market in the week through reverse repo auction at an interest rate of 6.50 per cent per annum against the previous week's Tk 90 billion, they said.
Besides, it withdrew Tk 5.585 billion against 30-day BB bills at an annual interest rate of 7.36 per cent.
The central bank also withdrew Tk 4.00 billion conducting auctions of BGT bonds at an interest rate of 11.74 per cent per annum.
The dealer banks borrowed money mainly at rates varying between 6.50 per cent and 6.75per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 6.70 per cent.
The central bank tried to maintain cost of local currency higher in interbank deals by regularly withdrawing cash through reverse repo, treasury bills and BB bills to protect the foreign exchange market from buying pressure, they said.
The market felt negligible pressure on liquidity due to withdrawal of cash through treasury bills, sources said.
The government borrowed Tk 8.00 billion Sunday through auctions of treasury bills. It resulted in withdrawal of Tk 8.00 billion from the market in the week.
The central bank accepted Tk 5.00 billion, Tk 2.00 billion and Tk 1.00 billion against the 28-day, 91-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills were 7.29 per cent, 7.63 per cent and 8.47 per cent respectively per annum.
The net outflow of cash from the market was expected to put increased pressure on liquidity. The impact on the market was, however, negligible, the fund managers said.
The inter-bank call money rate remained steady last week although the central bank withdrew cash through reverse repurchase agreement (repo), treasury bills, Bangladesh Bank (BB) bills and Bangladesh Government Treasury (BGT) bonds, fund managers said.
The market experienced adequate liquidity to meet the strong demand for cash in an active market influencing the call rate to retain its earlier trend, they said.
The rate fluctuated between 6.50 per cent and 10.00 per cent maintaining the previous week's range. In most deals, the rate, however, moved between 6.50 per cent and 6.75 per cent against the previous week's range between 6.50 per cent and 6.70 per cent.
The call rate remained above the bank rate of 5.00 per cent in all transactions confirming higher than expected pressure on liquidity, fund managers said.
The rate rose to its high at 10.00 per cent adhering to the previous week's peak. The rate moved above the trend with some non-banking financial institutions borrowing cash at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The market experienced reasonable pressure on liquidity throughout the week, they said.
The central bank withdrew about Tk 40 billion from the market in the week through reverse repo auction at an interest rate of 6.50 per cent per annum against the previous week's Tk 90 billion, they said.
Besides, it withdrew Tk 5.585 billion against 30-day BB bills at an annual interest rate of 7.36 per cent.
The central bank also withdrew Tk 4.00 billion conducting auctions of BGT bonds at an interest rate of 11.74 per cent per annum.
The dealer banks borrowed money mainly at rates varying between 6.50 per cent and 6.75per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 6.70 per cent.
The central bank tried to maintain cost of local currency higher in interbank deals by regularly withdrawing cash through reverse repo, treasury bills and BB bills to protect the foreign exchange market from buying pressure, they said.
The market felt negligible pressure on liquidity due to withdrawal of cash through treasury bills, sources said.
The government borrowed Tk 8.00 billion Sunday through auctions of treasury bills. It resulted in withdrawal of Tk 8.00 billion from the market in the week.
The central bank accepted Tk 5.00 billion, Tk 2.00 billion and Tk 1.00 billion against the 28-day, 91-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills were 7.29 per cent, 7.63 per cent and 8.47 per cent respectively per annum.
The net outflow of cash from the market was expected to put increased pressure on liquidity. The impact on the market was, however, negligible, the fund managers said.