Fluctuations in call rate
Saturday, 29 March 2008
Sarwar Zahan
The inter-bank call money rate fluctuated last week remaining high in the beginning but started easing in the concluding days. The central bank used its tools to both inject into and withdraw cash from the market for ensuring better management, fund managers said.
The call rate in extreme range moved between 7.50 per cent and 20.00 per cent in the week against the previous week's range between 8.00 per cent and 20.00 per cent, but it eased in the later part with the high edge at 13.00 per cent.
The rate, however, moved mainly between 7.50 per cent and 10.00 per cent in most deals against the previous week's range between 8.00 per cent and 20.00 per cent.
The market experienced high pressure on liquidity from the beginning of the week due to withdrawal of cash through treasury bills. The pressure started easing from the middle of the week due to injection of fresh cash through repurchase agreement (repo). Considering improvement in the liquidity position, the central bank also withdrew cash from the market through reverse repo, fund managers said.
The central bank injected Tk 51.92 billion through (repo) auctions, including Tk 45.27 billion provided to primary dealers as liquidity support, at an interest rate of 8.50 per cent per annum.
The central bank, on the other hand, withdrew Tk 4.41 billion against reverse repo at an annual interest rate 6.50 per cent and Tk 500 million against 20-year Bangladesh Government Treasury bonds at an interest rate of 13.14 per cent per annum that influenced the call rate to maintain a high level.
The borrowing of cash by some non-banking financial institutions at high rates from the inter-bank market also put some pressure on liquidity, fund managers said.
The dealer banks borrowed money mainly at rates varying between 7.50 cent and 15.00 per cent among them in the inter-bank market against the previous week's range between 12.00 cent and 20.00 per cent.
The call rate mostly moved far above the bank rate of 5.00 per cent in all deals indicating that the liquidity met a tight market, they said.
The borrowing of cash through treasury bills also put pressure on liquidity.
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 through treasury bills.
The central bank accepted Tk 5.00 billion, Tk 2.50 billion and Tk 1.50 billion against the 28-day, 91-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.39 per cent, 7.66 per cent and 8.46 per cent per annum.
The market is expected to maintain its current trend in future, fund managers said.
The inter-bank call money rate fluctuated last week remaining high in the beginning but started easing in the concluding days. The central bank used its tools to both inject into and withdraw cash from the market for ensuring better management, fund managers said.
The call rate in extreme range moved between 7.50 per cent and 20.00 per cent in the week against the previous week's range between 8.00 per cent and 20.00 per cent, but it eased in the later part with the high edge at 13.00 per cent.
The rate, however, moved mainly between 7.50 per cent and 10.00 per cent in most deals against the previous week's range between 8.00 per cent and 20.00 per cent.
The market experienced high pressure on liquidity from the beginning of the week due to withdrawal of cash through treasury bills. The pressure started easing from the middle of the week due to injection of fresh cash through repurchase agreement (repo). Considering improvement in the liquidity position, the central bank also withdrew cash from the market through reverse repo, fund managers said.
The central bank injected Tk 51.92 billion through (repo) auctions, including Tk 45.27 billion provided to primary dealers as liquidity support, at an interest rate of 8.50 per cent per annum.
The central bank, on the other hand, withdrew Tk 4.41 billion against reverse repo at an annual interest rate 6.50 per cent and Tk 500 million against 20-year Bangladesh Government Treasury bonds at an interest rate of 13.14 per cent per annum that influenced the call rate to maintain a high level.
The borrowing of cash by some non-banking financial institutions at high rates from the inter-bank market also put some pressure on liquidity, fund managers said.
The dealer banks borrowed money mainly at rates varying between 7.50 cent and 15.00 per cent among them in the inter-bank market against the previous week's range between 12.00 cent and 20.00 per cent.
The call rate mostly moved far above the bank rate of 5.00 per cent in all deals indicating that the liquidity met a tight market, they said.
The borrowing of cash through treasury bills also put pressure on liquidity.
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 through treasury bills.
The central bank accepted Tk 5.00 billion, Tk 2.50 billion and Tk 1.50 billion against the 28-day, 91-day and 364-day bills respectively.
The ranges of the implicit yields against the accepted bills respectively were 7.39 per cent, 7.66 per cent and 8.46 per cent per annum.
The market is expected to maintain its current trend in future, fund managers said.