Call rate remains steady
Saturday, 28 July 2007
Sarwar Zahan
The inter-bank call money rate was steady last week repeating the previous week's trend despite withdrawal of large amounts 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 rate fluctuated between 6.50 per cent and 10.00 per cent maintaining the previous week's range. In most deals, the rate moved between 6.50 per cent and 6.70 per cent adhering to the previous week's range, they said.
The call rate stayed above the bank rate of 5.00 per cent throughout the week indicating a higher-than-expected pressure on liquidity, fund managers said.
The rate rose to its high at 10.00 per cent to coincide with the previous week's peak. The rate rose above the main trend due to some stray transactions, fund managers said.
The market experienced a steady pressure on liquidity from the beginning of the week and the trend continued throughout the week maintaining overall stability, they said.
The central bank withdrew Tk 94.71 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 about Tk 37.88 billion, they said.
Besides, it drained out Tk 10.66 billion against 30-day BB bills at an annual interest rate of 7.37 per cent.
The central bank also withdrew Tk 500 million holding auctions of 20-year BGT bills at an interest rate of 15.95 per cent per annum.
The dealer banks made deals mainly at rates varying between 6.50 per cent and 6.70 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 6.60 per cent.
Some banks and non-banking financial institutions borrowed cash at high rates from the inter-bank market to satisfy immediate demands of their clients. This forced the call rate to rise above the main trend of the market, fund management sources said.
The central bank maintained the policy of maintaining a higher cost of local currency in the interbank deals to protect the foreign exchange market from buying pressure, they 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 in the week.
Bidders offered Tk 10.26 billion, Tk 2.01 billion and Tk 1.03 billion against 28-day, 91-day and 182-day bills respectively.
The central bank, however, accepted Tk 5.00 billion against the 28-day bills. No bid was accepted for 91-day and 182-day bills.
In addition to 28-day bills, Tk 2.00 billion and Tk 1.00 billion were devolved to Bangladesh Bank against 91-day and 182-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.32-7.33 per cent, 7.62 per cent and 7.89 per cent.
The net outflow of cash from the market is expected to increase pressure on liquidity, the fund managers said.
The inter-bank call money rate was steady last week repeating the previous week's trend despite withdrawal of large amounts 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 rate fluctuated between 6.50 per cent and 10.00 per cent maintaining the previous week's range. In most deals, the rate moved between 6.50 per cent and 6.70 per cent adhering to the previous week's range, they said.
The call rate stayed above the bank rate of 5.00 per cent throughout the week indicating a higher-than-expected pressure on liquidity, fund managers said.
The rate rose to its high at 10.00 per cent to coincide with the previous week's peak. The rate rose above the main trend due to some stray transactions, fund managers said.
The market experienced a steady pressure on liquidity from the beginning of the week and the trend continued throughout the week maintaining overall stability, they said.
The central bank withdrew Tk 94.71 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 about Tk 37.88 billion, they said.
Besides, it drained out Tk 10.66 billion against 30-day BB bills at an annual interest rate of 7.37 per cent.
The central bank also withdrew Tk 500 million holding auctions of 20-year BGT bills at an interest rate of 15.95 per cent per annum.
The dealer banks made deals mainly at rates varying between 6.50 per cent and 6.70 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 6.60 per cent.
Some banks and non-banking financial institutions borrowed cash at high rates from the inter-bank market to satisfy immediate demands of their clients. This forced the call rate to rise above the main trend of the market, fund management sources said.
The central bank maintained the policy of maintaining a higher cost of local currency in the interbank deals to protect the foreign exchange market from buying pressure, they 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 in the week.
Bidders offered Tk 10.26 billion, Tk 2.01 billion and Tk 1.03 billion against 28-day, 91-day and 182-day bills respectively.
The central bank, however, accepted Tk 5.00 billion against the 28-day bills. No bid was accepted for 91-day and 182-day bills.
In addition to 28-day bills, Tk 2.00 billion and Tk 1.00 billion were devolved to Bangladesh Bank against 91-day and 182-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.32-7.33 per cent, 7.62 per cent and 7.89 per cent.
The net outflow of cash from the market is expected to increase pressure on liquidity, the fund managers said.