Sharp fluctuations in call rate
Saturday, 29 December 2007
Sarwar Zahan
The inter-bank call money rate showed sharp fluctuations in the pre-Eid and post-festival weeks rising to its high at 17.00 per cent, while the week closed Thursday with the call rate touching its peak at 12.00 per cent, fund managers said.
The demand for cash was lower during the last week, but the rate maintained a high level for most of the days in the week because of delay in re-channelling of cash in the post-festival period. The central bank injected fresh cash into the market using its repurchase agreement tool to ease pressure on liquidity and keep the call rate at a reasonable level, they said.
The central bank, however, withdrew cash through auctions of Bangladesh Bank (BB) bills and Bangladesh government treasury (BGT) bonds that left some pressure on liquidity, fund managers said.
The rate moved between 6.60 per cent and 15.50 per cent last week against the previous week's level of 6.50 per cent and 14.00 per cent. The rate mainly maintained the range between 8.00 per cent and 15.50 per cent during the week and dropped to 6.60-12.00 per cent level on the concluding day.
In most deals, the rate, however, moved between 9.00 per cent and 14.00 per cent rising from the previous week's range between 7.00 per cent and 12.00 per cent, they added.
The call rate moved above the bank rate of 5.00 per cent in all transactions evidently reflecting a higher-than-expected pressure on liquidity, fund managers said.
The rate rose above the main trend with some non-banking financial institutions borrowing cash at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The central bank injected Tk 6.00 billion into the market in the week through repo auction at an interest rate of 8.50 per cent per annum, they said.
Besides, the central bank withdrew Tk 650 million through BGT bonds.
The dealer banks borrowed money mainly at rates varying between 8.50 per cent and 14.00 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 9.00 per cent.
The central bank intensively monitored the cash flow situation and remained cautious about withdrawing cash from the market through reverse repo, treasury bills and bonds. The lower withdrawal of cash through its tools reflected a picture of conscious market management, fund managers said.
Bankers forecast further easing of the call rate in coming days with inflow of cash withdrawn ahead of Eid festival.
The inter-bank call money rate showed sharp fluctuations in the pre-Eid and post-festival weeks rising to its high at 17.00 per cent, while the week closed Thursday with the call rate touching its peak at 12.00 per cent, fund managers said.
The demand for cash was lower during the last week, but the rate maintained a high level for most of the days in the week because of delay in re-channelling of cash in the post-festival period. The central bank injected fresh cash into the market using its repurchase agreement tool to ease pressure on liquidity and keep the call rate at a reasonable level, they said.
The central bank, however, withdrew cash through auctions of Bangladesh Bank (BB) bills and Bangladesh government treasury (BGT) bonds that left some pressure on liquidity, fund managers said.
The rate moved between 6.60 per cent and 15.50 per cent last week against the previous week's level of 6.50 per cent and 14.00 per cent. The rate mainly maintained the range between 8.00 per cent and 15.50 per cent during the week and dropped to 6.60-12.00 per cent level on the concluding day.
In most deals, the rate, however, moved between 9.00 per cent and 14.00 per cent rising from the previous week's range between 7.00 per cent and 12.00 per cent, they added.
The call rate moved above the bank rate of 5.00 per cent in all transactions evidently reflecting a higher-than-expected pressure on liquidity, fund managers said.
The rate rose above the main trend with some non-banking financial institutions borrowing cash at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The central bank injected Tk 6.00 billion into the market in the week through repo auction at an interest rate of 8.50 per cent per annum, they said.
Besides, the central bank withdrew Tk 650 million through BGT bonds.
The dealer banks borrowed money mainly at rates varying between 8.50 per cent and 14.00 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 9.00 per cent.
The central bank intensively monitored the cash flow situation and remained cautious about withdrawing cash from the market through reverse repo, treasury bills and bonds. The lower withdrawal of cash through its tools reflected a picture of conscious market management, fund managers said.
Bankers forecast further easing of the call rate in coming days with inflow of cash withdrawn ahead of Eid festival.