Slightly upward trend in call rate
Saturday, 27 October 2007
Sarwar Zahan
The inter-bank call money rate showed a slightly upward trend last week due to withdrawal of large amounts of cash through auctions of reverse repurchase agreement (repo), treasury bills, Bangladesh Government Treasury (BGT) bonds and Bangladesh Bank (BB) bills, fund managers said.
The market, however, witnessed adequate liquidity to meet the demand for cash in an active market that forced the call rate to experience a limited rise only, they said.
The rate moved between 6.50 per cent and 10.50 per cent against the previous week's range between 6.50 per cent and 10.00 per cent. In most deals, the rate, however, fluctuated between 6.50 per cent and 6.75 per cent against the previous week's range between 6.50 per cent and 6.70 per cent.
The call rate moved above the bank rate of 5.00 per cent in all sessions indicating a higher-than-expected pressure on liquidity, fund managers said.
The rate was at its high at 10.50 per cent against the previous week's peak at 10.00 per cent. The rate rose above the main trend due to borrowing of cash by some non-banking financial institutions at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The market experienced an increased pressure on liquidity in the concluding days of the week, they said.
The central bank withdrew about Tk 49 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 17 billion, they said.
Besides, it withdrew Tk 6.50 billion against 30-day BB bills at an annual interest rate of 7.36 per cent.
The central bank also withdrew Tk 500 million against 20-year BGT bonds at an interest rate of 13.88 per cent per annum.
The dealer banks borrowed money mainly at rates varying between 6.50 per cent and 6.75 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 6.70 per cent.
The central bank was active to keep cost of local currency high in interbank deals by regularly withdrawing cash through auctions of reverse repo, treasury bills and bonds to protect the foreign exchange market from buying pressure, they said.
The market experienced some carried-over pressure on liquidity due to withdrawal of cash through treasury bills on the last day of the week, sources said.
The government borrowed Tk 7.00 billion Thursday through auctions of treasury bills. This resulted in withdrawal of Tk 7.00 billion from the market in the week.
Bidders offered Tk 10.62 billion and Tk 2.01 billion against 28-day and 91-day bills respectively.
The central bank, however, accepted Tk 5.00 billion and Tk 240 million against the 28-day and 91-day bills respectively.
Besides, Tk 1.76 billion was devolved to primary dealers for 91-day bills.
The ranges of the implicit yields against the accepted bills respectively were 7.27-7.32 per cent and 7.63 per cent per annum.
The net outflow of cash from the market left a negligible pressure on liquidity, the fund managers said.
The inter-bank call money rate showed a slightly upward trend last week due to withdrawal of large amounts of cash through auctions of reverse repurchase agreement (repo), treasury bills, Bangladesh Government Treasury (BGT) bonds and Bangladesh Bank (BB) bills, fund managers said.
The market, however, witnessed adequate liquidity to meet the demand for cash in an active market that forced the call rate to experience a limited rise only, they said.
The rate moved between 6.50 per cent and 10.50 per cent against the previous week's range between 6.50 per cent and 10.00 per cent. In most deals, the rate, however, fluctuated between 6.50 per cent and 6.75 per cent against the previous week's range between 6.50 per cent and 6.70 per cent.
The call rate moved above the bank rate of 5.00 per cent in all sessions indicating a higher-than-expected pressure on liquidity, fund managers said.
The rate was at its high at 10.50 per cent against the previous week's peak at 10.00 per cent. The rate rose above the main trend due to borrowing of cash by some non-banking financial institutions at high rates from the inter-bank market to meet urgent requirements of their clients, fund managers said.
The market experienced an increased pressure on liquidity in the concluding days of the week, they said.
The central bank withdrew about Tk 49 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 17 billion, they said.
Besides, it withdrew Tk 6.50 billion against 30-day BB bills at an annual interest rate of 7.36 per cent.
The central bank also withdrew Tk 500 million against 20-year BGT bonds at an interest rate of 13.88 per cent per annum.
The dealer banks borrowed money mainly at rates varying between 6.50 per cent and 6.75 per cent among them in the inter-bank market against the previous week's range between 6.50 per cent and 6.70 per cent.
The central bank was active to keep cost of local currency high in interbank deals by regularly withdrawing cash through auctions of reverse repo, treasury bills and bonds to protect the foreign exchange market from buying pressure, they said.
The market experienced some carried-over pressure on liquidity due to withdrawal of cash through treasury bills on the last day of the week, sources said.
The government borrowed Tk 7.00 billion Thursday through auctions of treasury bills. This resulted in withdrawal of Tk 7.00 billion from the market in the week.
Bidders offered Tk 10.62 billion and Tk 2.01 billion against 28-day and 91-day bills respectively.
The central bank, however, accepted Tk 5.00 billion and Tk 240 million against the 28-day and 91-day bills respectively.
Besides, Tk 1.76 billion was devolved to primary dealers for 91-day bills.
The ranges of the implicit yields against the accepted bills respectively were 7.27-7.32 per cent and 7.63 per cent per annum.
The net outflow of cash from the market left a negligible pressure on liquidity, the fund managers said.