Interbank call rate stays steady
Saturday, 25 October 2008
Sarwar Zahan
The interbank call money rate maintained a stable level despite withdrawal of cash from the market. It happened due to the comfortable level of cash flow, fund managers said.
The central bank constantly withdrew cash from the market using its tools, but it put little impact on liquidity.
The call rate in its extreme range mainly fluctuated between 5.50 per cent and 11.50 per cent against the previous week's range of 6.00 per cent to 11.50 per cent.
The rate, however, moved mainly between 6.50 per cent and 8.50 per cent in most deals against the previous week's range of 6.50 per cent to 8.00 per cent that indicated a steady pressure on liquidity.
The market remained active from the beginning of the week and the central bank preferred to ensure stability by withdrawing cash through bills, bonds and reverse repo auctions that led to a balance between demand and supply, according to the fund managers.
The central bank withdrew around Tk 66.72 billion through reverse repurchase agreement (repo) auctions at an interest rate of 6.50 per cent per annum against the previous week's total of Tk 37.24 billion.
Besides, the central bank withdrew Tk 4.00 billion, including Tk 252 million, against Bangladesh Government Treasury Bonds at an interest rate of 10.60 per cent per annum.
In addition, the government borrowed Tk 7.50 billion Sunday through auctions of treasury bills.
Bidders offered Tk 6.80 billion and Tk 3.40 billion against 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 4.50 billion and Tk 1.20 billion against 91-day and 182-day bills respectively.
The net outflow of cash from the market was expected to increase pressure on liquidity, but it did not happen, the fund managers observed.
The lower edge of the call rate stayed above the bank rate of 5.00 per cent in all sessions indicating an overall high pressure on liquidity.
Some banks and financial institutions borrowed cash at high rates from the interbank market to meet urgent needs of their clients. It influenced the call rate to move above the trend in stray deals, sources said.
The dealer banks mainly borrowed cash at rates varying between 6.50 per cent and 8.00 per cent among them in the interbank market against the previous week's range of 6.00 per cent to 7.50 per cent.
The interbank call money rate maintained a stable level despite withdrawal of cash from the market. It happened due to the comfortable level of cash flow, fund managers said.
The central bank constantly withdrew cash from the market using its tools, but it put little impact on liquidity.
The call rate in its extreme range mainly fluctuated between 5.50 per cent and 11.50 per cent against the previous week's range of 6.00 per cent to 11.50 per cent.
The rate, however, moved mainly between 6.50 per cent and 8.50 per cent in most deals against the previous week's range of 6.50 per cent to 8.00 per cent that indicated a steady pressure on liquidity.
The market remained active from the beginning of the week and the central bank preferred to ensure stability by withdrawing cash through bills, bonds and reverse repo auctions that led to a balance between demand and supply, according to the fund managers.
The central bank withdrew around Tk 66.72 billion through reverse repurchase agreement (repo) auctions at an interest rate of 6.50 per cent per annum against the previous week's total of Tk 37.24 billion.
Besides, the central bank withdrew Tk 4.00 billion, including Tk 252 million, against Bangladesh Government Treasury Bonds at an interest rate of 10.60 per cent per annum.
In addition, the government borrowed Tk 7.50 billion Sunday through auctions of treasury bills.
Bidders offered Tk 6.80 billion and Tk 3.40 billion against 91-day and 364-day bills respectively.
The central bank, however, accepted Tk 4.50 billion and Tk 1.20 billion against 91-day and 182-day bills respectively.
The net outflow of cash from the market was expected to increase pressure on liquidity, but it did not happen, the fund managers observed.
The lower edge of the call rate stayed above the bank rate of 5.00 per cent in all sessions indicating an overall high pressure on liquidity.
Some banks and financial institutions borrowed cash at high rates from the interbank market to meet urgent needs of their clients. It influenced the call rate to move above the trend in stray deals, sources said.
The dealer banks mainly borrowed cash at rates varying between 6.50 per cent and 8.00 per cent among them in the interbank market against the previous week's range of 6.00 per cent to 7.50 per cent.