Dhaka, Bangladesh (BBN) – Bangladesh money market faced liquidity pressure in the last week, ended on Wednesday while the exchange rate of local currency against the US dollar remained stable.
A good number of banks have expressed their unwillingness to lend money to other banks through call money market mainly due to lower interest rates, according to market insiders.
As a result, amount of overall turnover in the call money market fell significantly in the last, they added.
The volume of overall transactions in the market came down to BDT 35.07 billion on Wednesday from BDT 59.56 billion a week ago, according to the central bank’s latest statistics.
The banks now prefer to invest their excess fund in the form of deposit to other cash-hungry banks instead of call money market, they explained.
Besides, inter-bank call money rate moved up slightly in the last week despite of lower borrowing by the government from the banking system to meet budget deficit partly.
The weighted average call money rate rose to 4.42 per cent on Wednesday Thursday from 4.41 per cent a week ago. It was 4.61 per cent on December 27, 2018.
The rate was 2.77 per cent at the end of June 2018. It was 4.03 per cent on December 27, 2017.
On the other hand, the central bank injected around BDT 20 billion in the market through repo auction and assured liquidity support (ALS) to the primary dealer banks on Wednesday.
Surplus fund with the government accounts along with selling of the US dollar by the central bank to the commercial banks continuously has pushed up liquidity pressure on the market, they added.
Currently, the government is holding more than BDT 50 billion in excess liquidity in its accounts, according to a senior central banker.