Dhaka, Bangladesh (BBN)– Maturity of the Bangladesh Bank (BB) bills has helped keeping the money market stable before the Eid-ul-Fitr festival, experts and officials said.
Around Tk 200 billion has been injected in the market in the last two weeks following maturity of the BB bills, despite higher withdrawal of cash from the banks, they explained.
Currently, the central bank of Bangladesh is using its three bills for implementation of the monetary policy with effective liquidity management.
The bills are – 07-day Bangladesh Bank Bill, 14-day Bangladesh Bank Bill and 30-day Bangladesh Bank Bill.
They also said total outstanding of the BB bills came down to BDT 230.55 billion as on June 21 from around BDT 400 billion two weeks ago.
The overall excess liquidity with the banks is set to fall significantly after adjustment of the BB bills maturity, a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
“We expect that the overall excess liquidity will come down to below BDT 1.0 trillion-mark shortly,” the central banker said without elaborating.
Currently, the excess liquidity with the banks stood at more than BDT 1.0 trillion. It was BDT 1.23 trillion as on December 31 last year, according to the central bank’s latest statistics.
Meanwhile, the inter-bank call money rate remained stable on Thursday, the last working day before the Eid festival, despite higher withdrawal of cash from the banks.
The call money rate ranged between 2.25 per cent and 4.50 per cent on the day, unchanged from the previous level. But most of the deals were settled at rates varying between 3.25 per cent and 4.50 per cent, the market operators said.
The weighted average of call money rate remained unchanged at 4.05 per cent on Thursday. It was 3.95 per cent a week ago.
In the last week, the call money rate moved up slightly following higher withdrawal of cash from the banks before the Eid.
Around BDT 250 billion was withdrawn from the country’s banking system to meet the growing demand for cash before the Eid festival, a senior banker estimated.
However, the volume of overall transactions in the call money market increased significantly in the last week ahead of the Eid festival.
The volume of transactions in the inter-bank call money market rose to BDT 92.68 billion on Wednesday from BDT 74.74 billion on June 15, the BB’s latest data showed.
The call money rate was almost stable before the Eid festival, as most of banks, particularly the state-owned commercial banks, are awash with excess liquidity, according to the private banker.
Most of the bank branches in Motijheel, Dilkusha and other commercial areas of the capital witnessed long queues of people, waiting mostly to withdraw money before the Eid festival.