Call rate retains high level
Saturday, 20 December 2008
Sarwar Zahan
The inter-bank call money rate retained its high level last week despite injection of fresh cash into the market, as there was supply constraint, fund managers said.
Funds drained out before Eid vacation were yet to return to the banking channel and this created pressure on liquidity, they said.
The call rate in extreme range fluctuated mainly between 8.00 per cent and 20.00 per cent against the previous week's range between 7.50 per cent and 20.00 per cent.
The rate, however, fluctuated mainly between 10.00 per cent and 14.00 per cent in most deals against the previous week's range between 8.00 per cent and 14.00 per cent indicating higher pressure on liquidity.
The central bank injected cash repurchase agreement (repo) and on the other hand withdrew fund through reverse repo and treasury bills to ensure effective management in the market, fund managers said.
The central bank injected Tk 130.09 billion into the market through repo auctions at an interest rate of 8.75 per cent per annum against the previous week's total of Tk 49.967 billion.
It, however, withdrew Tk 1.50 billion against 15-year Bangladesh government treasury bonds at an annual interest rate of 12.14 per cent.
The central bank also withdrew Tk 3.05 billion through reverse repo auctions at an annual interest rate of 6.75 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.
The central bank conducted auctions of 91-day and 364-day bills on the day.
Bidders offered Tk 6.0555 billion and Tk 2.5865 billion against 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 2.50 billion and Tk 640 million against 91-day and 364-day bills respectively.
Besides, Tk 2.436 billion was devolved to primary dealers against 364-day bills for liquidity support.
The ranges of the implicit yields against the accepted bills respectively were 7.89 per cent and 8.58 per cent per annum.
The net outflow of cash from the market is expected to increase pressure on liquidity, the fund managers said.
The market felt the hardship of cash crisis that resulted in call rate's movements at high level, the fund managers said.
The lower edge of the call rate stayed far above the bank rate of 5.00 per cent in all sessions indicating an overall increased pressure on liquidity.
Some banks and financial institutions borrowed cash at high rates in stray deals from the inter-bank market to meet urgent needs of their clients raising the call rate above the main trend, fund managers said.
The dealer banks borrowed cash mainly at rates varying between 8.50 per cent and 12.00 per cent among them in the inter-bank market against the previous week's range between 8.50 per cent and 10.00 per cent.
The liquidity of the market might improve from the next week with the return of the cash in the banking channel, fund managers said.
The inter-bank call money rate retained its high level last week despite injection of fresh cash into the market, as there was supply constraint, fund managers said.
Funds drained out before Eid vacation were yet to return to the banking channel and this created pressure on liquidity, they said.
The call rate in extreme range fluctuated mainly between 8.00 per cent and 20.00 per cent against the previous week's range between 7.50 per cent and 20.00 per cent.
The rate, however, fluctuated mainly between 10.00 per cent and 14.00 per cent in most deals against the previous week's range between 8.00 per cent and 14.00 per cent indicating higher pressure on liquidity.
The central bank injected cash repurchase agreement (repo) and on the other hand withdrew fund through reverse repo and treasury bills to ensure effective management in the market, fund managers said.
The central bank injected Tk 130.09 billion into the market through repo auctions at an interest rate of 8.75 per cent per annum against the previous week's total of Tk 49.967 billion.
It, however, withdrew Tk 1.50 billion against 15-year Bangladesh government treasury bonds at an annual interest rate of 12.14 per cent.
The central bank also withdrew Tk 3.05 billion through reverse repo auctions at an annual interest rate of 6.75 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.
The central bank conducted auctions of 91-day and 364-day bills on the day.
Bidders offered Tk 6.0555 billion and Tk 2.5865 billion against 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 2.50 billion and Tk 640 million against 91-day and 364-day bills respectively.
Besides, Tk 2.436 billion was devolved to primary dealers against 364-day bills for liquidity support.
The ranges of the implicit yields against the accepted bills respectively were 7.89 per cent and 8.58 per cent per annum.
The net outflow of cash from the market is expected to increase pressure on liquidity, the fund managers said.
The market felt the hardship of cash crisis that resulted in call rate's movements at high level, the fund managers said.
The lower edge of the call rate stayed far above the bank rate of 5.00 per cent in all sessions indicating an overall increased pressure on liquidity.
Some banks and financial institutions borrowed cash at high rates in stray deals from the inter-bank market to meet urgent needs of their clients raising the call rate above the main trend, fund managers said.
The dealer banks borrowed cash mainly at rates varying between 8.50 per cent and 12.00 per cent among them in the inter-bank market against the previous week's range between 8.50 per cent and 10.00 per cent.
The liquidity of the market might improve from the next week with the return of the cash in the banking channel, fund managers said.