Call rate marks slight rise
Saturday, 24 November 2007
Sarwar Zahan
The inter-bank call money rate marked slight rise last week with 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 market experienced a higher demand for cash and the central bank was alert to skilfully manage adequate liquidity to maintain the call rate at a reasonable level, they said.
The rate fluctuated between 6.50 per cent and 10.50 per cent against the previous week's range between 6.50 per cent and 10.00 per cent. In most deals, the rate, however, moved between 6.50 per cent and 8.00 per cent against the previous week's range between 6.50 per cent and 6.75 per cent. This indicated a rising demand for cash in the market.
The call rate also fluctuated above the bank rate of 5.00 per cent in all transactions that reflected a higher-than-expected pressure on liquidity, fund managers said.
The rate rose to its high at 10.50 per cent against the previous week's peak at 10.00 per cent. The rate rose above the main trend with some non-banking financial institutions borrowing cash at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The central bank withdrew about Tk 22.21 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 40 billion, they said.
The central bank withdrew Tk 4.00 billion through auctions of five-year BGT bonds, including Tk 1.79 billion against bids. Tk 2.21 billion devolved to dealer banks, at an interest rate of 10.65 per cent per annum.
Besides, it withdrew Tk 300 million against 30-day BB bills at an annual interest rate of 7.36 per cent.
The dealer banks borrowed money mainly at rates varying between 6.50 per cent and 8.00 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 6.75 per cent.
The central bank was cautious to withdraw cash through reverse repo, treasury bills and BB bills in order to keep the cost of the local currency high in interbank deals for protecting the foreign exchange market from buying pressure, they said.
The market enjoyed comfortable liquidity to ignore any impact of withdrawal of cash through treasury bills, sources said.
The government borrowed Tk 8.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 8.00 billion from the market.
Bidders offered Tk 8.06 billion, Tk 2.253 billion and Tk 2.565 billion against 28-day, 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 4.26 billion, Tk 583 million and Tk 785 million against the 28-day, 91-day and 364-day bills respectively.
Besides, Tk 740 million, Tk 1.417 billion and Tk 215 million were devolved to primary dealers for 28-day, 91-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.28-7.31 per cent, 7.63 per cent and 8.47 per cent per annum.
The net outflow of cash from the market did not however, increase pressure on liquidity, the fund managers said.
The inter-bank call money rate marked slight rise last week with 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 market experienced a higher demand for cash and the central bank was alert to skilfully manage adequate liquidity to maintain the call rate at a reasonable level, they said.
The rate fluctuated between 6.50 per cent and 10.50 per cent against the previous week's range between 6.50 per cent and 10.00 per cent. In most deals, the rate, however, moved between 6.50 per cent and 8.00 per cent against the previous week's range between 6.50 per cent and 6.75 per cent. This indicated a rising demand for cash in the market.
The call rate also fluctuated above the bank rate of 5.00 per cent in all transactions that reflected a higher-than-expected pressure on liquidity, fund managers said.
The rate rose to its high at 10.50 per cent against the previous week's peak at 10.00 per cent. The rate rose above the main trend with some non-banking financial institutions borrowing cash at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The central bank withdrew about Tk 22.21 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 40 billion, they said.
The central bank withdrew Tk 4.00 billion through auctions of five-year BGT bonds, including Tk 1.79 billion against bids. Tk 2.21 billion devolved to dealer banks, at an interest rate of 10.65 per cent per annum.
Besides, it withdrew Tk 300 million against 30-day BB bills at an annual interest rate of 7.36 per cent.
The dealer banks borrowed money mainly at rates varying between 6.50 per cent and 8.00 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 6.75 per cent.
The central bank was cautious to withdraw cash through reverse repo, treasury bills and BB bills in order to keep the cost of the local currency high in interbank deals for protecting the foreign exchange market from buying pressure, they said.
The market enjoyed comfortable liquidity to ignore any impact of withdrawal of cash through treasury bills, sources said.
The government borrowed Tk 8.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 8.00 billion from the market.
Bidders offered Tk 8.06 billion, Tk 2.253 billion and Tk 2.565 billion against 28-day, 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 4.26 billion, Tk 583 million and Tk 785 million against the 28-day, 91-day and 364-day bills respectively.
Besides, Tk 740 million, Tk 1.417 billion and Tk 215 million were devolved to primary dealers for 28-day, 91-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.28-7.31 per cent, 7.63 per cent and 8.47 per cent per annum.
The net outflow of cash from the market did not however, increase pressure on liquidity, the fund managers said.