The interbank call money rate remained stable at high level last week. The pressure on liquidity influenced by higher demand for cash continued without visible fluctuations in the rate. The call rate stood at its high at 25.00 per cent adhering to the previous week's peak. The central bank as usual withdrew cash from the market through reverse repurchase agreement (repo) auction to keep local currency costly in the interbank market, fund managers said.
The call rate mainly moved between 10.00 per cent and 25.00 per cent against the previous week's range between 9.50 per cent and 24.00 per cent. The rate, however, moved mainly between 12.00 per cent and 15.00 per cent in most of the deals, fund managers said.
The balance between demand for and supply of money was efficiently maintained despite withdrawal of huge cash from the market. This proved that the flow of cash in the banking channel was adequate to maintain reasonable liquidity.
The central bank withdrew about Tk 11.00 billion from the market through reverse repo auction in the week against previous week's Tk 11.75 billion. This reflected a slightly lower demand for cash in the interbank market, they said.
The dealer banks charged rates ranging between 10.00 per cent and 15.00 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 resulted in a higher call rate, fund management sources said.
The authority was apparently bent upon to maintaining a high call money rate to protect the foreign exchange market from excess buying pressure, they said.
The outflow of cash through auctions of treasury bills put some pressure on liquidity.
The government borrowed a total of Tk 7.643 billion Sunday through the auctions of treasury bills. On the other hand, Tk 10.548 billion was injected into the market due to maturity of some treasury bills. This resulted in net inflow of cash amounting to Tk 2.905 billion in the market.
Bidders offered Tk 7.233 billion, Tk 251 million, Tk 160 million and Tk 0,90 million against 28-day, 91-day, 364-day and two-year bills respectively.
The central bank, however, accepted the bids amounting to Tk 7.233 billion, Tk 250 million, and Tk 160 million against 28-day, 91-day and 364-day bills respectively.
The ranges of their implicit yields respectively were 7.04-7.05 per cent, 7.20 per cent and 7.75-7.90 per cent per annum.
The injection of fresh cash into the market with maturity of treasury bills contributed to sustaining liquidity.