Call rate closes low
Sarwar Zahan | Saturday, 16 August 2008
The inter-bank call money rate closed low last week due to injection of fresh cash into the market, that helped improve the liquidity, fund managers said.
The market experienced a strong pressure on liquidity in the beginning and opened the week with the call rate at a high level. The pressure on liquidity started easing with the central bank's intervention, they said.
The call rate in extreme range fluctuated mainly between 7.00 per cent and 15.00 per cent against the previous week's range between 7.00 per cent and 20.00 per cent.
The rate, however, moved mainly between 8.00 per cent and 10.00 per cent in most deals against the previous week's range between 7.50 per cent and 14.00 per cent, reflecting a lower pressure on liquidity.
The central bank remained alert to use its tools for easing pressure on liquidity and it continuously injected fresh cash into the market. The measure worked positively, reducing pressure on liquidity during the concluding days of the week. The call rate moved at a reasonable level, fund managers said.
The central bank injected fresh cash of Tk 51.735 billion into the market through repurchase agreement (repo) auctions at an interest rate of 8.50 per cent per annum to ease the pressure on liquidity against the previous week's Tk 79.06 billion.
It, on the other hand, withdrew Tk 2.05 billion through reverse repo at an interest rate of 6.50 per cent per annum against the previous week's Tk 4.48 billion.
The central bank also withdrew Tk 1.50 billion through 15-year Bangladesh government treasury bonds at an interest rate of 12.14 per cent per annum.
The lower edge of the call rate stayed above the bank rate of 5.00 per cent in all sessions indicating that the market experienced an overall high pressure on liquidity.
Some banks and financial institutions borrowed cash at high rates from the inter-bank market to meet urgent needs of their clients. This led to rise of the call rate above the normal trend in stray deals, fund managers said.
The dealer banks mainly used to borrow cash at rates varying between 7.00 per cent and 14.00 per cent among them in the inter-bank market against the previous week's range between 7.50 per cent and 12.00 per cent.
The market, however, witnessed less fluctuations in call rate due to steady demand for cash over the days. Banks needed cash mainly for internal adjustments that kept the inter-bank call market active, fund managers said.
The central bank preferred to maintain stability in market to avoid repetition of previous week's volatility and injected fresh cash into the market. As a result, the withdrawal of cash was lower. The behaviour of the market appeared cool during the concluding days of the week and the call rate moved mainly between 7.00 per cent and 10.00 per cent, they said.
The market might experience an increased demand for cash ahead of the holy month of Ramadan due to momentum in business activities, market sources said.
The market experienced a strong pressure on liquidity in the beginning and opened the week with the call rate at a high level. The pressure on liquidity started easing with the central bank's intervention, they said.
The call rate in extreme range fluctuated mainly between 7.00 per cent and 15.00 per cent against the previous week's range between 7.00 per cent and 20.00 per cent.
The rate, however, moved mainly between 8.00 per cent and 10.00 per cent in most deals against the previous week's range between 7.50 per cent and 14.00 per cent, reflecting a lower pressure on liquidity.
The central bank remained alert to use its tools for easing pressure on liquidity and it continuously injected fresh cash into the market. The measure worked positively, reducing pressure on liquidity during the concluding days of the week. The call rate moved at a reasonable level, fund managers said.
The central bank injected fresh cash of Tk 51.735 billion into the market through repurchase agreement (repo) auctions at an interest rate of 8.50 per cent per annum to ease the pressure on liquidity against the previous week's Tk 79.06 billion.
It, on the other hand, withdrew Tk 2.05 billion through reverse repo at an interest rate of 6.50 per cent per annum against the previous week's Tk 4.48 billion.
The central bank also withdrew Tk 1.50 billion through 15-year Bangladesh government treasury bonds at an interest rate of 12.14 per cent per annum.
The lower edge of the call rate stayed above the bank rate of 5.00 per cent in all sessions indicating that the market experienced an overall high pressure on liquidity.
Some banks and financial institutions borrowed cash at high rates from the inter-bank market to meet urgent needs of their clients. This led to rise of the call rate above the normal trend in stray deals, fund managers said.
The dealer banks mainly used to borrow cash at rates varying between 7.00 per cent and 14.00 per cent among them in the inter-bank market against the previous week's range between 7.50 per cent and 12.00 per cent.
The market, however, witnessed less fluctuations in call rate due to steady demand for cash over the days. Banks needed cash mainly for internal adjustments that kept the inter-bank call market active, fund managers said.
The central bank preferred to maintain stability in market to avoid repetition of previous week's volatility and injected fresh cash into the market. As a result, the withdrawal of cash was lower. The behaviour of the market appeared cool during the concluding days of the week and the call rate moved mainly between 7.00 per cent and 10.00 per cent, they said.
The market might experience an increased demand for cash ahead of the holy month of Ramadan due to momentum in business activities, market sources said.