The local overnight call money market was steady throughout the past week with the call money rate remaining unchanged at 6.50 to 7.00 per cent.
In the treasury bill auction held Sunday, bid for Tk 11,250 million was accepted, compared with a total of Tk 8,324 million in the previous week's bid. The weighted average yield rose slightly for the 28-day T-bills, but remained unchanged for the two-year category of T-bills sold on the day.
The demand for US dollar was stable throughout the past week and it remained unchanged against Bangladesh taka.
In the international foreign market, the dollar rose Friday, capping its largest one-week rise in nearly a month on the view the Federal Reserve might not be able to keep official US interest rates steady for long. A surprisingly strong US retail sales report for July stoked speculation that rate hikes could resume even although the Fed only Tuesday paused its tightening campaign of some two years with benchmark short-term rates at 5.25 per cent.
At the beginning of the last week, the euro held firm against the dollar and yen Monday after a first estimate of growth in the single currency area for the second quarter came stronger than expected, boosting expectations for higher interest rates. The dollar rose to its highest levels in more than two weeks against the yen after robust US retail sales data last week fanned expectations the Federal Reserve might resume raising interest rates soon.
In the middle of the week, euro briefly hit a record high against the yen Tuesday, buoyed by yield differentials, while the dollar held steady on the day. The euro rose to its highest since the single currency was launched in 1999, but was steady against the dollar. The dollar was down against the yen and was off its earlier two-week high against a basket of major currencies.
At the end of the past week, the dollar hit one-week lows against the euro and yen Thursday, having fallen sharply the previous day when tame US inflation data raised expectations the Federal Reserve will keep interest rates on hold. Euro gains against the dollar were trimmed briefly after final euro zone July inflation came in below expectations.
Commercial Bank of Ceylon
The local call money market was quite stable throughout the past week. Very few banks were on the borrowing side. The interbank call money rate ranged between 6.40 per cent and 6.50per cent, which is quite similar compared to the week before. The dealers of local call money market were not expecting any instability in the rate in the coming week.
In the last week, Bangladesh Bank (BB) accepted T-bills worth Tk 11.25 billion, while maturity of previously accepted T-bills was worth Tk 11.196 billion.
The BB drained-out Tk 54 million by accepting more treasury bills than maturity. The BB accepted only 28-day, 364-day and two-year T-bills. The yield of 28-day T-bill was at 7.25 per cent, yield of 364-day T-bill at 8.40 per cent and yield of two-year T-bill at 9.30 per cent. The weighted average yield of the past week was quite similar compared to the week before.
The US dollar and Bangladesh taka of local foreign exchange market weakened over the past week. The volume of transactions was far lower than the previous week. A few banks reduced their buying and selling rates in the past week. Most of the interbank foreign exchange dealers did not foresee any drastic volatility in US dollar and Bangladesh taka rate in the coming week, however slight depreciation of Bangladesh taka against US dollar will not be surprising in the context of current market situation. The transactions of the daily average volume of US dollar and Bangladesh taka was $13.08 million in the past week against $20.86 million of the week before.
On the other hand, the daily average volume of FC and Bangladesh taka transactions were $0.67 million in the past week against $0.27 million of the week before.
For non-commercial payments (telegraphic transfer as donations, wage earners remittance, dollar drafts etc), the range of average TT buying rates from customers was between Tk 69.07 and Tk 69.45, while average TT selling rate was at Tk 69.75/70.50.
In the week before, the swap market of US dollar and Bangladesh taka was active for two days but the volume was nearly triple compared to the previous week. This was almost 229 per cent higher compared to the previous week. This indicated that the banks were very much dependent on swaps to make import-related payments compared to the pervious week.
In the unofficial market, the rates of US dollar and Bangladesh taka was Tk 70.75/71.00 against Tk 70.85/70.10 of the week, which indicated a slight dip for dollar in the informal market.