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The interbank call money rate showed slightly upward bias last week. The market experienced pressure on liquidity because of higher demand for cash. The call rate stood at its high at 25.00 per cent against the previous week's peak at 24.00 per cent. The central bank contuned to withdraw cash from the market conducting reverse repurchase agreement (repo) auction apparently adhering to maintaining high borrowing cost of local currency from the interbank market, fund managers said.
The call rate mainly moved between 9.50 per cent and 25.00 per cent against previous week's range between 8.50 per cent and 24.00 per cent. The rate, however, moved mainly between 10.00 per cent and 12.00 per cent in most of the deals, fund managers said.
The flow of cash in the banking channel was sufficient to neutralise the negative pressure of money withdrawal and to sustain the existing balance between demand and supply in the market.
The central bank withdrew Tk 11.58 billion from the market through reverse repo auction in the week against that of previous week's Tk 7.55 billion. This reflected slight higher demand for cash in the interbank market, they said.
The dealer banks charged rates ranging between 9.50 per cent and 14.00 per cent in transactions among them in the inter-bank market. Some of the non-banking financial institutions, however, borrowed cash from the interbank market at high rates. This raised the call rate to high level, fund management sources said.
The authority seemed to remain highly busy in protecting the foreign exchange market from buying pressure by maintaining the call rate at levels higher than expected to discourage purchase of excess dollar. The call rate, as a result, remained almost steady at its high level without any visible fluctuation, they said.
The outflow of cash through auctions of treasury bills also put some pressure on liquidity.
The government borrowed a total of Tk 8.437 billion Sunday through the auctions of treasury bills. On the other hand, Tk 9.702 billion was injected into the market due to maturity of some treasury bills. It resulted in net inflow of cash amounting to Tk 1.265 billion in the market.
Bidders offered Tk 7.697 billion, Tk 0.10 million, Tk 310 million, Tk 30 million and Tk 500 million against 28-day, 91-day, 182-day, 364-day and two-year bills respectively.
The central bank, however, accepted the bids amounting to Tk 7.697 billion, Tk 210 million, Tk 30 million and Tk 500 million against 28-day, 182-day, 364-day and two-year bills respectively.
The ranges of their implicit yields respectively were 7.04-7.05 per cent, 7.45-7.48 per cent, 7.75 per cent and 8.65 per cent per annum.
The injection of fresh cash into the market through maturity of treasury bills helped ease some pressure on liquidity.
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