Dhaka, Bangladesh (BBN)- Bangladesh’s inter-bank call money market is once again showing signs of liquidity pressure ahead of Eid-ul-Azha, as banks face rising cash withdrawals to meet seasonal demand.
The opening call money rate on Monday moved up to 10.50%–10.75%, compared with 10.25%–10.50% in the previous session, while market operators believe the rate could cross 11% by the end of the day.
The trend is already visible in Bangladesh Bank data. The weighted average rate (WAR) in the call money market increased to 10.19% on Sunday from 9.99% a working day earlier, even as total market turnover dropped sharply to BDT 42.84 billion from BDT 58.27 billion.
This year, however, the pressure appears more pronounced because several banks are already struggling with liquidity shortages, elevated funding costs and weaker depositor confidence. As a result, financially stronger banks are becoming increasingly cautious in lending to peers in the overnight market.
The combination of rising rates and lower turnover suggests tighter liquidity conditions in the banking system. Ahead of major religious festivals, demand for physical cash usually rises significantly as individuals and businesses withdraw funds for sacrificial animal purchases, transport, retail trade and household spending.
BBN/SSR/AD