Call rate eases marginally
Saturday, 23 June 2007
Sarwar Zahan
The inter-bank call money rate marginally eased last week in an active market despite withdrawal of large amounts of cash through auctions reverse repurchase agreement (repo), treasury bills and Bangladesh Bank (BB) bills, fund managers said.
The central bank, on the other hand, refrained from injecting fresh cash into the market through repo auction, they said.
The call rate moved mainly between 6.50 per cent and 11.50 per cent against the previous week's range between 6.60 per cent and 12.50 per cent. In most deals, the rate moved between 6.60 per cent and 7.00 per cent against the previous week's range between 6.80 per cent and 8.00 per cent, they said.
The call rate moved above the bank rate of 5.00 per cent throughout the week that indicated a higher-than-expected pressure on liquidity, fund managers said.
The rate rose to its high at 11.50 per cent against the previous week's peak at 12.50 per cent. The rate moved above the main trend due to some stray transactions, fund managers said.
The market experienced a steady pressure on liquidity from the beginning of the week that continued up to the concluding day. The overall stability was the prominent feature of the market, they said.
The central bank withdrew Tk 67.95 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 about Tk 21.92 billion, they said.
It also drained out Tk 13.80 billion through auctions of Bangladesh Bank bills at an annual interest rate of 7.39 per cent putting a negligible pressure on the liquidity, sources said.
The dealer banks made deals mainly at rates varying between 6.60 per cent and 7.50 per cent among them in the inter-bank market against the previous week's range between 6.60 per cent and 8.50 per cent.
Some banks and non-banking financial institutions used to borrow cash at high rates from the inter-bank market to meet urgent requirements of their clients. This influenced the call rate to move above the main trend of the market, fund management sources said.
The central bank was bent to protect the foreign exchange market from buying pressure maintaining the cost of the local currency at a high level in the inter-bank market. The withdrawal of cash from the market was a part of such policy, they said.
The government borrowed Tk 7.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 7.00 billion from the market in the week.
Bidders offered Tk 7.19 billion, Tk 400 million and Tk 55 million against the 28-day, 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 4.00 billion, Tk 400 million and Tk 55 million respectively against the 28-day, 91-day and 364-day bills.
Besides, Tk 2.60 billion and Tk 945 million were devolved to the Bangladesh Bank against 91-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.31-7.33 per cent, 7.60-7.61 per cent and 8.48 per cent.
The net outflow of cash from the market is expected to increase pressure on liquidity, the fund managers said.
The inter-bank call money rate marginally eased last week in an active market despite withdrawal of large amounts of cash through auctions reverse repurchase agreement (repo), treasury bills and Bangladesh Bank (BB) bills, fund managers said.
The central bank, on the other hand, refrained from injecting fresh cash into the market through repo auction, they said.
The call rate moved mainly between 6.50 per cent and 11.50 per cent against the previous week's range between 6.60 per cent and 12.50 per cent. In most deals, the rate moved between 6.60 per cent and 7.00 per cent against the previous week's range between 6.80 per cent and 8.00 per cent, they said.
The call rate moved above the bank rate of 5.00 per cent throughout the week that indicated a higher-than-expected pressure on liquidity, fund managers said.
The rate rose to its high at 11.50 per cent against the previous week's peak at 12.50 per cent. The rate moved above the main trend due to some stray transactions, fund managers said.
The market experienced a steady pressure on liquidity from the beginning of the week that continued up to the concluding day. The overall stability was the prominent feature of the market, they said.
The central bank withdrew Tk 67.95 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 about Tk 21.92 billion, they said.
It also drained out Tk 13.80 billion through auctions of Bangladesh Bank bills at an annual interest rate of 7.39 per cent putting a negligible pressure on the liquidity, sources said.
The dealer banks made deals mainly at rates varying between 6.60 per cent and 7.50 per cent among them in the inter-bank market against the previous week's range between 6.60 per cent and 8.50 per cent.
Some banks and non-banking financial institutions used to borrow cash at high rates from the inter-bank market to meet urgent requirements of their clients. This influenced the call rate to move above the main trend of the market, fund management sources said.
The central bank was bent to protect the foreign exchange market from buying pressure maintaining the cost of the local currency at a high level in the inter-bank market. The withdrawal of cash from the market was a part of such policy, they said.
The government borrowed Tk 7.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 7.00 billion from the market in the week.
Bidders offered Tk 7.19 billion, Tk 400 million and Tk 55 million against the 28-day, 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 4.00 billion, Tk 400 million and Tk 55 million respectively against the 28-day, 91-day and 364-day bills.
Besides, Tk 2.60 billion and Tk 945 million were devolved to the Bangladesh Bank against 91-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.31-7.33 per cent, 7.60-7.61 per cent and 8.48 per cent.
The net outflow of cash from the market is expected to increase pressure on liquidity, the fund managers said.