Inter-bank call rate eases
Saturday, 18 October 2008
Sarwar Zahan
The inter-bank call money rate eased last week, as the market enjoyed ample flow of cash, fund managers said.
The central bank continued to withdrew cash from the market particularly in the concluding days of the week without putting any pressure on liquidity, they said.
The call rate in extreme range fluctuated mainly between 6.00 per cent and 11.50 per cent against the previous week's range between 7.00 per cent and 12.00 per cent.
The rate, however, fluctuated mainly between 6.50 per cent and 8.00 per cent in most deals against the previous week's range between 7.50 per cent and 8.50 per cent reflecting a lower pressure on liquidity.
The market witnessed a moderate pressure on liquidity from the beginning of the week and the central bank tried to maintain stability by withdrawing cash from the market. It withdrew cash through bills, bonds and reverse repo auctions to ensure balance between demand and supply, fund managers said.
The central bank withdrew around Tk 37.24 billion through reverse repurchase agreement (repo) auctions at an interest rate of 6.50 per cent per annum which left little impact on liquidity.
It also withdrew Tk 1.50 billion, including Tk 356.50 million that devolved to primary dealers, through 15-year Bangladesh government treasury bonds at an annual interest of 12.14 per cent.
The net outflow of cash from the market was expected to increase pressure on liquidity, as the market was active. But it did not happen, as the market was sufficiently liquid, the fund managers said.
The lower edge of the call rate remained above the bank rate of 5.00 per cent in all sessions that indicated an overall high pressure on liquidity.
Some banks and financial institutions had to borrow cash at high rates from the inter-bank market to meet urgent needs of their clients. This influenced the call rate to move above the main trend in a limited number of deals, fund managers said.
The dealer banks borrowed cash mainly at rates varying between 6.00 per cent and 7.50 per cent among them in the inter-bank market against the previous week's range between 7.00 per cent and 8.00 per cent.
The central bank injected fresh cash into the market in the previous week, but it remained constantly active to withdraw cash from the market using its relevant tools without creating any pressure on liquidity. This indicated that the cash flow was appreciably adequate in the market, fund managers said.
Most banks tried to meet the demand for cash from own sources. The process protected the inter-bank market from excessive pressure, they said.
The inter-bank call money rate eased last week, as the market enjoyed ample flow of cash, fund managers said.
The central bank continued to withdrew cash from the market particularly in the concluding days of the week without putting any pressure on liquidity, they said.
The call rate in extreme range fluctuated mainly between 6.00 per cent and 11.50 per cent against the previous week's range between 7.00 per cent and 12.00 per cent.
The rate, however, fluctuated mainly between 6.50 per cent and 8.00 per cent in most deals against the previous week's range between 7.50 per cent and 8.50 per cent reflecting a lower pressure on liquidity.
The market witnessed a moderate pressure on liquidity from the beginning of the week and the central bank tried to maintain stability by withdrawing cash from the market. It withdrew cash through bills, bonds and reverse repo auctions to ensure balance between demand and supply, fund managers said.
The central bank withdrew around Tk 37.24 billion through reverse repurchase agreement (repo) auctions at an interest rate of 6.50 per cent per annum which left little impact on liquidity.
It also withdrew Tk 1.50 billion, including Tk 356.50 million that devolved to primary dealers, through 15-year Bangladesh government treasury bonds at an annual interest of 12.14 per cent.
The net outflow of cash from the market was expected to increase pressure on liquidity, as the market was active. But it did not happen, as the market was sufficiently liquid, the fund managers said.
The lower edge of the call rate remained above the bank rate of 5.00 per cent in all sessions that indicated an overall high pressure on liquidity.
Some banks and financial institutions had to borrow cash at high rates from the inter-bank market to meet urgent needs of their clients. This influenced the call rate to move above the main trend in a limited number of deals, fund managers said.
The dealer banks borrowed cash mainly at rates varying between 6.00 per cent and 7.50 per cent among them in the inter-bank market against the previous week's range between 7.00 per cent and 8.00 per cent.
The central bank injected fresh cash into the market in the previous week, but it remained constantly active to withdraw cash from the market using its relevant tools without creating any pressure on liquidity. This indicated that the cash flow was appreciably adequate in the market, fund managers said.
Most banks tried to meet the demand for cash from own sources. The process protected the inter-bank market from excessive pressure, they said.