Sarwar Zahan

The inter-bank call money rate remained steady last week due to a highly liquid market, fund managers said.

The call rate in extreme range fluctuated mainly between .25 per cent and 10.0 per cent maintaining the previous week's range.

Most deals were, however, made at rates varying between 0.50 per cent and 1.50 per cent in most deals against the previous week's range between 0.50 per cent and 2.00 per cent. This reflected existence of excess liquidity in the market.

The buying of US dollar by the central bank from the market injected fresh cash into the market.

The central bank refrained from accepting reverse repurchase agreement (repo) in all sessions of the week that caused excess liquidity in the market, fund managers said.

It also refrained from withdrawing around Tk 20 billion through reverse repo auctions to ensure comfortable liquidity.

The central bank withdrew Tk 4.0 billion against five-year Bangladesh government treasury bonds at an annual interest rate of 10.15 per cent.

In addition, the government borrowed Tk 5.0 billion Sunday through auctions of treasury bills. This resulted in withdrawal of Tk 5.0 billion from the market in the week.

Bidders offered bids for Tk 12.2045 billion and Tk 8.7155 billion against 91-day and 364-day bills respectively.

The central bank, however, accepted Tk 2.50 billion and Tk 2.50 billion against 91-day and 364-day bills respectively.

The rates of the implicit yield against the accepted bills were 5.89-6.40 per cent and 8.00-8.31 per cent per annum respectively.

The net outflow of cash from the market was expected to put some pressure on liquidity, but the market remained highly liquid, the fund managers said.

Most deals were made at rates below the bank rate of 5.00 per cent evidently reflecting an extremely low pressure on liquidity.

The call rate, however, rose above the main level in stray deals fluctuating between 7.0 per cent and 10.0 per cent with borrowing of cash by some banks and financial institutions at high rates from the inter-bank market to meet urgent needs of their clients, fund managers said.

The dealer banks borrowed cash mainly at rates varying between 0.50 per cent and 1.00 per cent among them in the inter-bank market against the previous week's range between 0.50 per cent and 1.50 per cent.

The market is expected to maintain a comfortable liquidity in coming sessions with the central bank adhering to its non-intervention policy, fund managers said.