Dhaka, Bangladesh (BBN) - The inter-bank call money rate increased significantly on Sunday following the policy rate hike by the central bank, bankers said.
The weighted average rate (WAR) of call money rose to 9.87 per cent on the day from 9.50 per cent of the previous day. It was 9.56 per cent on Wednesday last.
The call rate ranged between 9.50 per cent and 10.50 per cent on the day against the previous range between 9.00 per cent and 10.50 per cent.
However, most of the deals were settled at rates varying between 9.75 per cent and 10.00 per cent, according to the market operators.
They also said the upward trend of call money rate may continue until Thursday next as all the scheduled banks have to maintain the 4.0 per cent cash reserve requirement (CRR) on the day with the central bank.
Under the existing rules, the banks are allowed to maintain the reserve at 3.50 per cent instead of the existing 4.0 per cent on a daily basis, but the bi-weekly average has to be 4.0 per cent in the end.
Besides, most of the banks will act cautiously, particularly in the call money market from next week as the central bank's repo facility once a week instead of existing two days from November 2024.
Under the new policy, all the scheduled banks will get the repo facility only on every Tuesday from November. If any Tuesday coincides with a public holiday, the repo-lending facility will be conducted on the subsequent working day.
Talking to the BBN, a senior treasury official at a private commercial bank said the transaction volume of the call money market may squeeze after implementation of the new policy on repo facility.
He also said the existing upward trend of the call money market is likely to continue by the end of this week for maintaining CRR with the central bank.
However, total turnover in the inter-bank call money market rose to BDT 45.07 billion on Sunday from BDT 42.87 billion on the previous working day. It was BDT 31.50 billion on Wednesday last.
Earlier on Tuesday, the central bank raised the policy rate, also known as the repo rate, by 50 basis points to 10.00 per cent in an effort to curb inflationary pressure on the economy.
The policy rate hike means banks under liquidity crunch will now have to pay more interest for loans taken from the central bank.
To manage liquidity more effectively, the BB also raised the upper limit of the policy interest corridor. The Standing Lending Facility (SLF) rate rises to 11.50 per cent, up from 11.00 per cent, while the Standing Deposit Facility (SDF) floor rate moves up to 8.50 per cent from 8.00 per cent.
BBN/SSR/AD