Call rate jumps to 18 per cent
Wednesday, 17 September 2008
FE Report
The inter-bank call money rate shot up to 18 per cent Tuesday because of rising pressure for withdrawal of fund ahead of the Eid-ul-Fitr festival, officials said.
The call money rate rose Tuesday morning as some banks faced sudden shortfall of liquidity because of withdrawal of funds by corporations and business establishments seeking to pay festival bonus to their employees.
However, the rising trend in call rate was halted by injection of fresh fund worth Tk 3.30 billion on the day by the central bank through the repurchase agreement (Repo) auction, they added.
The call rate ranged between 8.0 per cent and 18 per cent on the day against 6.50 per cent and 12.00 per cent of the previous day. However, most of the deals were settled between 12.00 per cent and 15 .00 per cent, the market operators said.
"We've strengthened our monitoring to keep stable the country's inter-bank money market ahead of the Eid festival," a senior official of the Bangladesh Bank (BB) told the FE.
He also said the central bank will use its tools like Repo auction in line with the market requirement that would help pull down the call money rate.
The overnight borrowing normally shoots up before Eid festivals when demand for cash from retail clients rises considerably.
Besides, the existing cash reserve requirement (CRR) rules put additional pressure on liquidity in the inter-bank money market.
Under the existing rules, the commercial banks have to adjust cash for maintaining the CRR at five per cent with the central bank from their total demand and time liabilities on a bi-weekly basis. The new week started from Monday.
The inter-bank call money rate shot up to 18 per cent Tuesday because of rising pressure for withdrawal of fund ahead of the Eid-ul-Fitr festival, officials said.
The call money rate rose Tuesday morning as some banks faced sudden shortfall of liquidity because of withdrawal of funds by corporations and business establishments seeking to pay festival bonus to their employees.
However, the rising trend in call rate was halted by injection of fresh fund worth Tk 3.30 billion on the day by the central bank through the repurchase agreement (Repo) auction, they added.
The call rate ranged between 8.0 per cent and 18 per cent on the day against 6.50 per cent and 12.00 per cent of the previous day. However, most of the deals were settled between 12.00 per cent and 15 .00 per cent, the market operators said.
"We've strengthened our monitoring to keep stable the country's inter-bank money market ahead of the Eid festival," a senior official of the Bangladesh Bank (BB) told the FE.
He also said the central bank will use its tools like Repo auction in line with the market requirement that would help pull down the call money rate.
The overnight borrowing normally shoots up before Eid festivals when demand for cash from retail clients rises considerably.
Besides, the existing cash reserve requirement (CRR) rules put additional pressure on liquidity in the inter-bank money market.
Under the existing rules, the commercial banks have to adjust cash for maintaining the CRR at five per cent with the central bank from their total demand and time liabilities on a bi-weekly basis. The new week started from Monday.