Call rate ends slightly low
Saturday, 8 December 2007
Sarwar Zahan
The inter-bank call money rate ended slightly low last week despite strong demand for and withdrawal of cash through auctions of reverse repurchase agreement (repo), treasury bills, Bangladesh Bank (BB) bills and Bangladesh government treasury (BGT) bonds, fund managers said.
The liquidity in the market was sufficient to accommodate the higher demand for cash and sustain balance between demand and supply, they said.
The rate fluctuated between 6.50 per cent and 10.00 per cent against the previous week's range between 6.50 per cent and 10.50 per cent. In most deals, the rate, however, moved between 6.50 per cent and 7.00 per cent falling slightly from the previous week's range between 6.50 per cent and 7.50 per cent, they added.
The call rate moved above the bank rate of 5.00 per cent in all transactions indicating a higher-than-expected pressure on liquidity, fund managers said.
The rate closed at its high at 10.50 per cent against the previous week's peak at 10.50 per cent. The rate was forced to rise above the main trend with some non-banking financial institutions borrowing cash at high rates from the inter-bank market to meet urgent immediate of their clients, fund managers said.
The central bank withdrew about Tk 15.07 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 50.28 billion, they said.
The central bank withdrew Tk 1.55 billion on the day through 30-day BB bills at an interest rate of 7.36 per cent per annum.
In addition, it withdrew Tk 4.00 billion, including Tk 3.635 billion through bids. Tk 365 million develop to primary dealers against 10-year BGT bonds at an annual interest rate of 11.74 per cent.
The dealer banks borrowed money mainly at rates varying between 6.50 per cent and 7.00 per cent from among them in the inter-bank market against the previous week's range between 6.50 per cent and 7.50 per cent.
The central bank actively monitored the cash flow situation and was highly cautious to withdraw cash through reverse repo, treasury bills and BB bills. The low cash withdrawal through reverse repo reflected an adherence to conscious management of the market, fund managers said.
The central bank was also interested in keeping the cost of the local currency high in interbank deals for protecting the foreign exchange market from buying pressure by withdrawing reasonable amounts of cash through different tools, they said.
The withdrawal of cash through treasury bills created insignificant impact on liquidity, sources said.
The government borrowed Tk 8.00 billion Sunday through auctions of treasury bills. This caused withdrawal of Tk 8.00 billion from the market in the week.
Bidders offered Tk 5.62 billion, Tk 2.71 billion and Tk 1.67 billion against 28-day, 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 1.22 billion, Tk 700 million and Tk 346 million against 28-day, 91-day and 364-day bills respectively.
Besides, Tk 3.78 billion, Tk 1.30 billion and Tk 654 million were devolved to primary dealers respectively for 28-day, 91-day and 364-day bills.
The ranges of the implicit yields against the accepted bills respectively were 7.28-7.33 per cent, 7.62-7.63 per cent and 8.47 per cent per annum.
The net outflow of cash from the market is expected to increase pressure on liquidity, the fund managers said.
The net outflow of cash from the market was expected to put some pressure on liquidity, but the market experienced a negligible impact, the fund managers said.
The inter-bank call money rate ended slightly low last week despite strong demand for and withdrawal of cash through auctions of reverse repurchase agreement (repo), treasury bills, Bangladesh Bank (BB) bills and Bangladesh government treasury (BGT) bonds, fund managers said.
The liquidity in the market was sufficient to accommodate the higher demand for cash and sustain balance between demand and supply, they said.
The rate fluctuated between 6.50 per cent and 10.00 per cent against the previous week's range between 6.50 per cent and 10.50 per cent. In most deals, the rate, however, moved between 6.50 per cent and 7.00 per cent falling slightly from the previous week's range between 6.50 per cent and 7.50 per cent, they added.
The call rate moved above the bank rate of 5.00 per cent in all transactions indicating a higher-than-expected pressure on liquidity, fund managers said.
The rate closed at its high at 10.50 per cent against the previous week's peak at 10.50 per cent. The rate was forced to rise above the main trend with some non-banking financial institutions borrowing cash at high rates from the inter-bank market to meet urgent immediate of their clients, fund managers said.
The central bank withdrew about Tk 15.07 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 50.28 billion, they said.
The central bank withdrew Tk 1.55 billion on the day through 30-day BB bills at an interest rate of 7.36 per cent per annum.
In addition, it withdrew Tk 4.00 billion, including Tk 3.635 billion through bids. Tk 365 million develop to primary dealers against 10-year BGT bonds at an annual interest rate of 11.74 per cent.
The dealer banks borrowed money mainly at rates varying between 6.50 per cent and 7.00 per cent from among them in the inter-bank market against the previous week's range between 6.50 per cent and 7.50 per cent.
The central bank actively monitored the cash flow situation and was highly cautious to withdraw cash through reverse repo, treasury bills and BB bills. The low cash withdrawal through reverse repo reflected an adherence to conscious management of the market, fund managers said.
The central bank was also interested in keeping the cost of the local currency high in interbank deals for protecting the foreign exchange market from buying pressure by withdrawing reasonable amounts of cash through different tools, they said.
The withdrawal of cash through treasury bills created insignificant impact on liquidity, sources said.
The government borrowed Tk 8.00 billion Sunday through auctions of treasury bills. This caused withdrawal of Tk 8.00 billion from the market in the week.
Bidders offered Tk 5.62 billion, Tk 2.71 billion and Tk 1.67 billion against 28-day, 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 1.22 billion, Tk 700 million and Tk 346 million against 28-day, 91-day and 364-day bills respectively.
Besides, Tk 3.78 billion, Tk 1.30 billion and Tk 654 million were devolved to primary dealers respectively for 28-day, 91-day and 364-day bills.
The ranges of the implicit yields against the accepted bills respectively were 7.28-7.33 per cent, 7.62-7.63 per cent and 8.47 per cent per annum.
The net outflow of cash from the market is expected to increase pressure on liquidity, the fund managers said.
The net outflow of cash from the market was expected to put some pressure on liquidity, but the market experienced a negligible impact, the fund managers said.