Call rate marks nominal rise
Sarwar Zahan | Saturday, 19 July 2008
The inter-bank call money rate marked nominal rise last week although the central bank actively used its tools to maintain stability in the market, fund managers said.
The market, however, witnessed a comfortable flow of cash that prevented the call rate from rising further in the face of slightly increased demand for cash, they said.
The call rate in extreme range fluctuated mainly between 6.00 per cent and 10.25 per cent against the previous week's range between 6.00 per cent and 10.00 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 7.50 per cent reflecting a nominally higher pressure on liquidity.
The pressure on liquidity, however, remained steady from the beginning of the week despite withdrawal of cash through treasury bills and reverse repurchase agreement (repo), fund managers said.
The central bank withdrew Tk 37.86 billion through reverse repurchase agreement (repo) at an interest rate of 6.50 per cent per annum against the previous week's Tk 41.78 billion.
Besides, it withdrew Tk 4.00 billion, including Tk 722 million that devolved to primary dealers, against Bangladesh government treasury bonds at 10.60 per cent of interest per annum.
The central bank, however, injected fresh cash of Tk 4.99 billion into the market through repo auctions at an interest rate of 8.50 per cent per annum to ease the pressure on liquidity.
The lower edge of the call rate moved above the bank rate of 5.00 per cent in all deals.
Some banks and financial institutions resorted to overnight borrowing at higher than normal rates from the inter-bank market to meet urgent needs of their clients. This influenced the call rate to rise above usual level in stray deals, fund managers said.
The dealer banks borrowed money mainly at rates varying between 6.00 per cent and 7.50 per cent among them in the inter-bank market against the previous week's range between 6.00 per cent and 7.00 per cent.
The borrowing of cash through treasury bills caused insignificant pressure on liquidity.
The government borrowed Tk 9.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 9.00 billion from the market in the week.
Bidders offered Tk 10.75 billion, Tk 1.50 billion and Tk 2.55 billion against 91-day, 182-day and 364-day bills respectively.
The central bank, however, accepted Tk 5.00 billion, Tk 230 million and Tk 100 million against the 91-day, 182-day and 364-day bills respectively.
Besides, Tk 1.27 billion and Tk 2.40 billion were devolved to primary dealers against 182-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.77-7.78 per cent, 7.99-8.00 per cent and 8.50-8.51 per cent per annum.
The net outflow of cash from the market was expected to create some pressure on liquidity, but the market mainly remained stable, the fund managers said.
The market, however, witnessed a comfortable flow of cash that prevented the call rate from rising further in the face of slightly increased demand for cash, they said.
The call rate in extreme range fluctuated mainly between 6.00 per cent and 10.25 per cent against the previous week's range between 6.00 per cent and 10.00 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 7.50 per cent reflecting a nominally higher pressure on liquidity.
The pressure on liquidity, however, remained steady from the beginning of the week despite withdrawal of cash through treasury bills and reverse repurchase agreement (repo), fund managers said.
The central bank withdrew Tk 37.86 billion through reverse repurchase agreement (repo) at an interest rate of 6.50 per cent per annum against the previous week's Tk 41.78 billion.
Besides, it withdrew Tk 4.00 billion, including Tk 722 million that devolved to primary dealers, against Bangladesh government treasury bonds at 10.60 per cent of interest per annum.
The central bank, however, injected fresh cash of Tk 4.99 billion into the market through repo auctions at an interest rate of 8.50 per cent per annum to ease the pressure on liquidity.
The lower edge of the call rate moved above the bank rate of 5.00 per cent in all deals.
Some banks and financial institutions resorted to overnight borrowing at higher than normal rates from the inter-bank market to meet urgent needs of their clients. This influenced the call rate to rise above usual level in stray deals, fund managers said.
The dealer banks borrowed money mainly at rates varying between 6.00 per cent and 7.50 per cent among them in the inter-bank market against the previous week's range between 6.00 per cent and 7.00 per cent.
The borrowing of cash through treasury bills caused insignificant pressure on liquidity.
The government borrowed Tk 9.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 9.00 billion from the market in the week.
Bidders offered Tk 10.75 billion, Tk 1.50 billion and Tk 2.55 billion against 91-day, 182-day and 364-day bills respectively.
The central bank, however, accepted Tk 5.00 billion, Tk 230 million and Tk 100 million against the 91-day, 182-day and 364-day bills respectively.
Besides, Tk 1.27 billion and Tk 2.40 billion were devolved to primary dealers against 182-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.77-7.78 per cent, 7.99-8.00 per cent and 8.50-8.51 per cent per annum.
The net outflow of cash from the market was expected to create some pressure on liquidity, but the market mainly remained stable, the fund managers said.