Call rate slides on excess liquidity
Saturday, 4 April 2009
Sarwar Zahan
The inter-bank call money rate slid significantly last week due to flow of excess cash in the market, fund managers said.
The call rate in extreme range fluctuated mainly between 1.50 per cent and 10.0 per cent against the previous week's range between 7.50 per cent and 12.0 per cent.
The rate, however, fluctuated mainly between 2.0 per cent and 4.00 per cent in most deals against the previous week's range between 7.50 per cent and 8.75 per cent. This indicated a lower pressure on liquidity.
The central bank refrained from injecting fresh cash through repurchase agreement (repo) and withdrawing fund through reverse repo and bonds that resulted in excess liquidity in the market, fund managers said.
It also refrained from withdrawing around Tk 10.0 billion through reverse repo auctions to ensure comfortable liquidity.
The government, however, borrowed Tk 2.50 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 2.50 billion from the market in the week.
The central bank conducted auctions of 182-day bills on the day.
Bidders offered bids for Tk 3.1445 billion against 182-day bills.
The central bank, however, accepted Tk 2.50 billion, including Tk 1.0205 billion that devolved to primary dealers, against 182-day bills.
The rate of the implicit yield against the accepted bills was 8.16 per cent per cent per annum.
The net outflow of cash from the market was expected to create some pressure on liquidity, but the market appeared highly liquid, the fund managers said.
The lower edge of the call rate moved below the bank rate of 5.00 per cent after many months showing an overall lower pressure on liquidity.
Some banks and financial institutions borrowed cash at high rates from the inter-bank market to meet urgent needs of their clients raising the call rate above the main trend in stray deals, fund managers said.
The dealer banks borrowed cash mainly at rates varying between 2.0 per cent and 5.0 per cent among them in the inter-bank market against the previous week's range between 7.50 per cent and 8.75 per cent.
The market is likely to maintain its current tone in coming sessions with continuation of comfortable flow of cash provided the central bank keeps up with its 'policy of no intervention', fund managers said.
The inter-bank call money rate slid significantly last week due to flow of excess cash in the market, fund managers said.
The call rate in extreme range fluctuated mainly between 1.50 per cent and 10.0 per cent against the previous week's range between 7.50 per cent and 12.0 per cent.
The rate, however, fluctuated mainly between 2.0 per cent and 4.00 per cent in most deals against the previous week's range between 7.50 per cent and 8.75 per cent. This indicated a lower pressure on liquidity.
The central bank refrained from injecting fresh cash through repurchase agreement (repo) and withdrawing fund through reverse repo and bonds that resulted in excess liquidity in the market, fund managers said.
It also refrained from withdrawing around Tk 10.0 billion through reverse repo auctions to ensure comfortable liquidity.
The government, however, borrowed Tk 2.50 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 2.50 billion from the market in the week.
The central bank conducted auctions of 182-day bills on the day.
Bidders offered bids for Tk 3.1445 billion against 182-day bills.
The central bank, however, accepted Tk 2.50 billion, including Tk 1.0205 billion that devolved to primary dealers, against 182-day bills.
The rate of the implicit yield against the accepted bills was 8.16 per cent per cent per annum.
The net outflow of cash from the market was expected to create some pressure on liquidity, but the market appeared highly liquid, the fund managers said.
The lower edge of the call rate moved below the bank rate of 5.00 per cent after many months showing an overall lower pressure on liquidity.
Some banks and financial institutions borrowed cash at high rates from the inter-bank market to meet urgent needs of their clients raising the call rate above the main trend in stray deals, fund managers said.
The dealer banks borrowed cash mainly at rates varying between 2.0 per cent and 5.0 per cent among them in the inter-bank market against the previous week's range between 7.50 per cent and 8.75 per cent.
The market is likely to maintain its current tone in coming sessions with continuation of comfortable flow of cash provided the central bank keeps up with its 'policy of no intervention', fund managers said.