Call rate steady with downward bias
Saturday, 3 November 2007
Sarwar Zahan
The inter-bank call money rate was steady with a downward bias last week despite withdrawal of large amounts of cash through auctions of reverse repurchase agreement (repo), treasury bills and Bangladesh Bank (BB) bills, fund managers said.
The market enjoyed comfortable liquidity to meet the demand for cash in an active market that influenced the call rate to sustain its earlier trend, they said.
The rate moved between 6.50 per cent and 10.00 per cent against the previous week's range between 6.50 per cent and 10.50 per cent. In most deals, the rate, however, fluctuated between 6.50 per cent and 6.70 per cent against the previous week's range between 6.50 per cent and 6.75 per cent.
The call rate stayed above the bank rate of 5.00 per cent in all transactions indicating a higher-than-expected pressure on liquidity, fund managers said.
The rate was at its high at 10.00 per cent against the previous week's peak at 10.50 per cent. The rate rose above the main trend, as some non-banking financial institutions borrowed cash at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The market experienced a moderate pressure on liquidity throughout the week, they said.
The central bank withdrew about Tk 90 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 49 billion, they said.
Besides, it withdrew Tk 5.103 billion holding auctions of BB bills, including Tk 4.703 billion against 30-day bills and Tk 400 million against 91-day bills at interest rates of 7.63 per cent and 7.63 per cent respectively per annum.
The dealer banks borrowed money 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 6.75 per cent.
The central bank was active to the keep cost of the local currency high in interbank deals withdrawing cash regularly through reverse repo, treasury bills and BB bills to protect the foreign exchange market from buying pressure, they said.
The market experienced a steady pressure on liquidity due to withdrawal of cash through treasury bills, sources said.
The government borrowed Tk 9.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 9.00 billion from the market in the week.
Bidders offered Tk 12.30 billion, Tk 2.56 billion, Tk 1.055 billion and Tk 1.662 billion against 28-day, 91-day, 182-day and 364-day bills respectively.
The central bank, however, accepted Tk 5.00 billion, Tk 550 million, Tk 145 million and Tk 632 million against the 28-day, 91-day, 182-day and 364-day bills respectively.
Besides, Tk 1.45 billion, Tk 855 million and Tk 368 million were devolved to primary dealers for 91-day, 182-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, 7.88-7.92 per cent and 8.48 per cent per annum.
The net outflow of cash from the market was expected to increase pressure on liquidity, but there was a negligible impact, the fund managers said.
The inter-bank call money rate was steady with a downward bias last week despite withdrawal of large amounts of cash through auctions of reverse repurchase agreement (repo), treasury bills and Bangladesh Bank (BB) bills, fund managers said.
The market enjoyed comfortable liquidity to meet the demand for cash in an active market that influenced the call rate to sustain its earlier trend, they said.
The rate moved between 6.50 per cent and 10.00 per cent against the previous week's range between 6.50 per cent and 10.50 per cent. In most deals, the rate, however, fluctuated between 6.50 per cent and 6.70 per cent against the previous week's range between 6.50 per cent and 6.75 per cent.
The call rate stayed above the bank rate of 5.00 per cent in all transactions indicating a higher-than-expected pressure on liquidity, fund managers said.
The rate was at its high at 10.00 per cent against the previous week's peak at 10.50 per cent. The rate rose above the main trend, as some non-banking financial institutions borrowed cash at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The market experienced a moderate pressure on liquidity throughout the week, they said.
The central bank withdrew about Tk 90 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 49 billion, they said.
Besides, it withdrew Tk 5.103 billion holding auctions of BB bills, including Tk 4.703 billion against 30-day bills and Tk 400 million against 91-day bills at interest rates of 7.63 per cent and 7.63 per cent respectively per annum.
The dealer banks borrowed money 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 6.75 per cent.
The central bank was active to the keep cost of the local currency high in interbank deals withdrawing cash regularly through reverse repo, treasury bills and BB bills to protect the foreign exchange market from buying pressure, they said.
The market experienced a steady pressure on liquidity due to withdrawal of cash through treasury bills, sources said.
The government borrowed Tk 9.00 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 9.00 billion from the market in the week.
Bidders offered Tk 12.30 billion, Tk 2.56 billion, Tk 1.055 billion and Tk 1.662 billion against 28-day, 91-day, 182-day and 364-day bills respectively.
The central bank, however, accepted Tk 5.00 billion, Tk 550 million, Tk 145 million and Tk 632 million against the 28-day, 91-day, 182-day and 364-day bills respectively.
Besides, Tk 1.45 billion, Tk 855 million and Tk 368 million were devolved to primary dealers for 91-day, 182-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, 7.88-7.92 per cent and 8.48 per cent per annum.
The net outflow of cash from the market was expected to increase pressure on liquidity, but there was a negligible impact, the fund managers said.