Dhaka, Bangladesh (BBN)- The central bank resumed the auction of 30-day Bangladesh Bank Bills on Monday aiming to mop up excess liquidity from the market, officials said.
The Bangladesh Bank (BB) accepted three bids worth BDT 2.55 billion at the auction on the day, resulting in withdrawal of the money from the market, they added.
A total of four bidders made their offer worth BDT 2.60 billion for the short-term security.
The rate of weighted average yield, generally known as interest rate, of the accepted bids was 2.53 percent annually, according to the auction result.
"It is a temporary measure totally. When the market turns around then the measure may be suspended again," a BB senior official said, adding that the central bank has taken the move to boost the country's money market.
The treasury officials, however, urged the central bank to continue the auction of the special bill until the pressure on excess liquidity in the banking sector eases.
"The BB is continuing the use of monetary tool to mop up excess liquidity from the market," a senior treasury official of a foreign commercial bank said.
The auction of bills were reintroduced on August 10 last year that continued until January 11 this year, the central bank officials said.
The central bank of Bangladesh reintroduced 30-day and 91-day Bangladesh Bank Bills in October 2006 as monetary policy instruments following decision that the government treasury bills and the bond auctions are exclusively used for the government debt management.
However, the auction of 91-day Bangladesh Bank Bills was discontinued to avoid duplication with 91-day Treasury Bills from January 8, 2008. There was also no auction of 30-day Bangladesh Bank Bills since January 8, 2008.
BBN/SS/SI/AD-09March10-2:56 pm (BST)