Call rate posts sharp rise
Saturday, 15 December 2007
Sarwar Zahan
The inter-bank call money rate posted sharp rise last week mainly due to higher demand for cash influenced by business momentum ahead of Eid festival. The withdrawal of cash through auctions of reverse repurchase agreement (repo), treasury bills, Bangladesh Bank (BB) bills and Bangladesh government treasury (BGT) bonds also left pressure on liquidity.
The central bank withdrew cash holding auctions of treasury bills twice last week that unsettled the balance between demand and supply pushing the call rate upward, they said.
The rate moved between 6.50 per cent and 14.00 per cent against the previous week's level between 6.50 per cent and 10.00 per cent. In most deals, the rate, however, moved between 7.00 per cent and 12.00 per cent rising from the previous week's range between 6.50 per cent and 7.00 per cent, they added.
The rate closed at its high at 14.00 per cent against the previous week's peak at 10.50 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 immediate of their clients.
The central bank withdrew about Tk 3.12 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 15.07 billion.
The central bank, however, injected Tk 2.56 billion into the market through repo auctions considering a perceptible pressure on liquidity.
The central bank monitored the cash flow situation and was highly cautious to withdraw cash from the market through reverse repo, treasury bills and bonds. The lower withdrawal of cash through reverse repo resulted from conscious market management.
The inter-bank call money rate posted sharp rise last week mainly due to higher demand for cash influenced by business momentum ahead of Eid festival. The withdrawal of cash through auctions of reverse repurchase agreement (repo), treasury bills, Bangladesh Bank (BB) bills and Bangladesh government treasury (BGT) bonds also left pressure on liquidity.
The central bank withdrew cash holding auctions of treasury bills twice last week that unsettled the balance between demand and supply pushing the call rate upward, they said.
The rate moved between 6.50 per cent and 14.00 per cent against the previous week's level between 6.50 per cent and 10.00 per cent. In most deals, the rate, however, moved between 7.00 per cent and 12.00 per cent rising from the previous week's range between 6.50 per cent and 7.00 per cent, they added.
The rate closed at its high at 14.00 per cent against the previous week's peak at 10.50 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 immediate of their clients.
The central bank withdrew about Tk 3.12 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 15.07 billion.
The central bank, however, injected Tk 2.56 billion into the market through repo auctions considering a perceptible pressure on liquidity.
The central bank monitored the cash flow situation and was highly cautious to withdraw cash from the market through reverse repo, treasury bills and bonds. The lower withdrawal of cash through reverse repo resulted from conscious market management.