The interbank call money rate was firmer in a generally stable market last week. The call rate fluctuated between 5.50 per cent and 12.00 per cent against previous week's range between 5.00 per cent and 12.00 per cent.
It, however, moved above the bank rate of 5.00 per cent and varied between 5.75 per cent and 12.00 per cent for most of the sessions in the week, fund managers said.
The central bank withdrew about Tk 2.00 billion through reverse repo auction at annual interest rates varying between 5.00 per cent and 5.50 per cent against previous week's withdrawal of Tk 12.45 billion. The lower demand for cash was attributed to increased inflow of huge cash in the banking channel ensuring a comfortable liquidity position.
The central bank was very cautious to withdraw cash as part of its policy to protect the foreign exchange market from excess pressure of demand for the dollar. The market experienced a nominal pressure on liquidity due to momentum in business activities ahead of holy Ramadan and festivals, they said.
The nationalised banks mainly transacted cash at rates swinging between 5.75 per cent and 7.00 per cent in the interbank market the dealer banks made transactions of cash at rates ranging between 5.50 per cent and 8.00 per cent among them. The non-banking financial institutions borrowed cash from the interbank market at higher rates, fund management sources said.
There was mismatch between maturity and auction of treasury bills that resulted in inflow of excess cash into the market. It contributed to maintain a reasonable liquidity.
The government borrowed a total of Tk 5.589 billion Sunday through the auctions of treasury bills. On the other hand, Tk 10.333 billion was injected into the market in the week due to maturity of some treasury bills. It resulted in a net inflow of Tk 4.744 billion into the market in the week.
The net inflow of cash in the market was expected to lessen pressure on liquidity. The market actually felt a nominal pressure on liquidity that influenced the call rate to rise above the bank rate, the fund managers said.
Bidders offered Tk 5.589 billion and Tk 200 million against 28-day and 91-day bills respectively.
The central bank, however, accepted the bids worth Tk 5.589 billion against 28-day bill.The range of the implicit yields was 6.70-6.75 per cent per annum.