Call rate eases slightly
Saturday, 1 November 2008
Sarwar Zahan
The inter-bank call money rate eased slightly last week, as the market enjoyed sufficient liquidity despite withdrawal of a large amount of cash through different tools used by the central bank, fund managers said.
The call rate in extreme range fluctuated mainly between 4.40 per cent and 11.50 per cent against the previous week's range between 5.50 per cent and 11.50 per cent. The rate, however, moved mainly between 6.50 per cent and 8.00 per cent in most deals against the previous week's range between 6.50 per cent and 8.50 per cent that reflected a steady pressure on liquidity.
The market appeared active from the beginning of the week. The central bank played an active role in ensuring market stability by withdrawing cash through bills, bonds and reverse repo auctions with the objective of maintaining balance between demand and supply, fund managers said.
The central bank withdrew around Tk 70.00 billion through reverse repurchase agreement (repo) auctions at an interest rate of 6.50 per cent per annum against the previous week's total of Tk 66.72 billion.
Besides, it withdrew Tk 1.25 billion through Bangladesh government treasury bonds at an interest rate of 13.04 per cent per annum.In addition, the government borrowed Tk 9.00 billion (900 crore) Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 9.00 billion from the market.
Bidders offered Tk 6.50 billion, Tk 1.82 billion and Tk 4.315 billion against 91-day, 182-day and 364-day bills respectively.
The central bank, however, accepted Tk 4.40 billion, Tk 1.40 billion and Tk 1.415 billion against 91-day, 182-day and 364-day bills respectively.
Besides, Tk 1.60 billion, Tk 100 million and Tk 1.085 billion were devolved to primary dealers against 91-day, 182-day and 364-day bills respectively for liquidity support. The ranges of the implicit yields against the accepted bills respectively were 7.89-7.90 per cent, 8.07-8.10 per cent and 8.55-8.57 per cent per annum.
The net outflow of cash from the market was expected to increase pressure on liquidity, but it left negligible Impact on the market, the fund managers said. The lower edge of the call rate came below the bank rate of 5.00 per cent in the last session indicating a decline in pressure on liquidity.
Some banks and financial institutions had to borrow cash at high rates from the inter-bank market to meet urgent needs of their clients. It influenced the call rate to move above the main trend in a limited number of deals, fund managers said.
The dealer banks borrowed cash mainly at rates varying between 6.50 per cent and 7.50 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 8.00 per cent, projecting an easing of pressure on liquidity.
The inter-bank call money rate eased slightly last week, as the market enjoyed sufficient liquidity despite withdrawal of a large amount of cash through different tools used by the central bank, fund managers said.
The call rate in extreme range fluctuated mainly between 4.40 per cent and 11.50 per cent against the previous week's range between 5.50 per cent and 11.50 per cent. The rate, however, moved mainly between 6.50 per cent and 8.00 per cent in most deals against the previous week's range between 6.50 per cent and 8.50 per cent that reflected a steady pressure on liquidity.
The market appeared active from the beginning of the week. The central bank played an active role in ensuring market stability by withdrawing cash through bills, bonds and reverse repo auctions with the objective of maintaining balance between demand and supply, fund managers said.
The central bank withdrew around Tk 70.00 billion through reverse repurchase agreement (repo) auctions at an interest rate of 6.50 per cent per annum against the previous week's total of Tk 66.72 billion.
Besides, it withdrew Tk 1.25 billion through Bangladesh government treasury bonds at an interest rate of 13.04 per cent per annum.In addition, the government borrowed Tk 9.00 billion (900 crore) Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 9.00 billion from the market.
Bidders offered Tk 6.50 billion, Tk 1.82 billion and Tk 4.315 billion against 91-day, 182-day and 364-day bills respectively.
The central bank, however, accepted Tk 4.40 billion, Tk 1.40 billion and Tk 1.415 billion against 91-day, 182-day and 364-day bills respectively.
Besides, Tk 1.60 billion, Tk 100 million and Tk 1.085 billion were devolved to primary dealers against 91-day, 182-day and 364-day bills respectively for liquidity support. The ranges of the implicit yields against the accepted bills respectively were 7.89-7.90 per cent, 8.07-8.10 per cent and 8.55-8.57 per cent per annum.
The net outflow of cash from the market was expected to increase pressure on liquidity, but it left negligible Impact on the market, the fund managers said. The lower edge of the call rate came below the bank rate of 5.00 per cent in the last session indicating a decline in pressure on liquidity.
Some banks and financial institutions had to borrow cash at high rates from the inter-bank market to meet urgent needs of their clients. It influenced the call rate to move above the main trend in a limited number of deals, fund managers said.
The dealer banks borrowed cash mainly at rates varying between 6.50 per cent and 7.50 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 8.00 per cent, projecting an easing of pressure on liquidity.