Call rate maintains soft tone
Saturday, 27 September 2008
Sarwar Zahan
The inter-bank call money rate maintained a soft tone despite strong demand for cash amid festival marketing, fund managers said.
The central bank remained constantly active to use its tools for maintaining market stability and checking any volatility in trading behaviour. It injected fresh cash and withdrew fund to maintain appropriate management for ensuring the movement of the call rate at a reasonable and stable level, they said.
The call rate in extreme range fluctuated mainly between 7.00 per cent and 13.00 per cent against the previous week's range between 7.00 per cent and 18.00 per cent showing an easing trend.
The rate, however, fluctuated mainly between 8.00 per cent and 10.00 per cent in most deals against the previous week's range between 8.00 per cent and 12.00 per cent indicating a lower pressure on liquidity.
The market experienced pressure on liquidity from the beginning of the week and the central bank tried to ease the pressure by injecting fresh cash into the market. It also withdrew cash through treasury bills and reverse repo auctions with the aim of ensuring balance between demand and supply, fund managers said.
The central bank injected fresh cash of about Tk 31.955 billion into the market through repurchase agreement (repo) auctions at interest rates ranging between 8.50 per cent and 8.75 per cent per annum to ease the pressure on liquidity against the previous week's Tk 75 billion.
The measure for demand management taken by the central bank through raising interest rate on cash transacted through repo auctions, however, created negligible impact on the market behaviour during the week, fund managers said.
The central bank, on the other hand, withdrew Tk 10.50 billion through reverse repo auctions at an interest rate of 6.50 per cent per annum.
Besides, it withdrew Tk 1.25 billion, including Tk 1.17 billion that devolved to primary dealers, against 20-year Bangladesh government treasury bonds at an annual interest rate of 13.07 per cent.
In addition, the government borrowed Tk 5.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 5.00 billion from the market in the week.
Bidders offered Tk 2.503 billion and Tk 2.63 billion against 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 903 million and Tk 1.03 billion against 91-day and 364-day bills respectively.
Besides, Tk 1.597 billion and Tk 1.47 billion were devolved to primary dealers against 91-day bills and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.81-7.85 per cent and 8.51-8.55 per cent per annum.
The net outflow of cash from the market was expected to increase pressure on liquidity, but it did not happen due to sufficient flow of cash in the market, the fund managers said.
The lower edge of the call rate stayed above the bank rate of 5.00 per cent throughout the week reflecting 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 forced the call rate to rise above normal level in limited number of deals, fund managers said.
The dealer banks borrowed cash at rates mainly varying between 7.00 per cent and 9.00 per cent among them in the inter-bank market against the previous week's range between 7.00 per cent and 12.00 per cent.
The central bank preferred to check excess flow of cash in the market to maintain market stability during the month of holy Ramadan, fund managers said.
Several banks were able to meet demand for cash from own sources indirectly protecting the inter-bank market from excessive pressure, they said.
The inter-bank call money rate maintained a soft tone despite strong demand for cash amid festival marketing, fund managers said.
The central bank remained constantly active to use its tools for maintaining market stability and checking any volatility in trading behaviour. It injected fresh cash and withdrew fund to maintain appropriate management for ensuring the movement of the call rate at a reasonable and stable level, they said.
The call rate in extreme range fluctuated mainly between 7.00 per cent and 13.00 per cent against the previous week's range between 7.00 per cent and 18.00 per cent showing an easing trend.
The rate, however, fluctuated mainly between 8.00 per cent and 10.00 per cent in most deals against the previous week's range between 8.00 per cent and 12.00 per cent indicating a lower pressure on liquidity.
The market experienced pressure on liquidity from the beginning of the week and the central bank tried to ease the pressure by injecting fresh cash into the market. It also withdrew cash through treasury bills and reverse repo auctions with the aim of ensuring balance between demand and supply, fund managers said.
The central bank injected fresh cash of about Tk 31.955 billion into the market through repurchase agreement (repo) auctions at interest rates ranging between 8.50 per cent and 8.75 per cent per annum to ease the pressure on liquidity against the previous week's Tk 75 billion.
The measure for demand management taken by the central bank through raising interest rate on cash transacted through repo auctions, however, created negligible impact on the market behaviour during the week, fund managers said.
The central bank, on the other hand, withdrew Tk 10.50 billion through reverse repo auctions at an interest rate of 6.50 per cent per annum.
Besides, it withdrew Tk 1.25 billion, including Tk 1.17 billion that devolved to primary dealers, against 20-year Bangladesh government treasury bonds at an annual interest rate of 13.07 per cent.
In addition, the government borrowed Tk 5.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 5.00 billion from the market in the week.
Bidders offered Tk 2.503 billion and Tk 2.63 billion against 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 903 million and Tk 1.03 billion against 91-day and 364-day bills respectively.
Besides, Tk 1.597 billion and Tk 1.47 billion were devolved to primary dealers against 91-day bills and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.81-7.85 per cent and 8.51-8.55 per cent per annum.
The net outflow of cash from the market was expected to increase pressure on liquidity, but it did not happen due to sufficient flow of cash in the market, the fund managers said.
The lower edge of the call rate stayed above the bank rate of 5.00 per cent throughout the week reflecting 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 forced the call rate to rise above normal level in limited number of deals, fund managers said.
The dealer banks borrowed cash at rates mainly varying between 7.00 per cent and 9.00 per cent among them in the inter-bank market against the previous week's range between 7.00 per cent and 12.00 per cent.
The central bank preferred to check excess flow of cash in the market to maintain market stability during the month of holy Ramadan, fund managers said.
Several banks were able to meet demand for cash from own sources indirectly protecting the inter-bank market from excessive pressure, they said.