Dhaka, Bangladesh (BBN)- The central bank of Bangladesh injected BDT 240 billion into the money market through purchasing the US dollar from banks during first eight-and-half months of the current fiscal year (FY) 2012-13, officials said.
Of the amount, an outstanding sum worth around BDT 80 billion is being paid to the banks following maturity of the government approved securities.
“The central bank is providing BDT 4.00 billion-BDT 5.00 billion to the banks each week against the maturity of the 30-day Bangladesh Bank (BB) bills,” a senior BB official said.
Market operators, however, expressed dissatisfaction over the BB’s latest move, saying that it has created obstacles to sufficient inflow of liquidity into the market.
“The inter-bank call money rate is still at a higher level hovering between 6.0 per cent and 10 per cent. But most of the deals have been settled at 10 per cent,” a private banker said.
The central bank started purchasing the US currency from the banks with the 30-day BB bills, and Islamic bonds from December last instead of cash money.
Besides, the Bangladesh Bank has expedited the auction of 30-day BB bills accepting the auction of the bills every working day in line with the market requirement aiming to mop up surplus funds from the market.
“We’re using different monetary instruments to bring down the amount of reserve money (RM) within the target level by March 31 this calendar year to contain inflationary pressure on the economy,” another BB official said.
The BB wants to bring down the amount of RM to BDT 1063 billion by the end of March 31 from the existing level of BDT 1085 billion, according to the central bankers.
As part of the moves, the central bank earlier squeezed the timeframe of assured liquidity support (ALS) for both primary dealers (PDs) and non-PD banks by 15 days to 60 days from 75 days earlier to mop up excess funds from the market.
“We’re now using monetary tools in line with the current monetary policy statement (MPS),” the central banker said, adding that the RM is always fuelling inflation through multiple effects of money supply on the economy.
Earlier on January 31, the central bank unveiled a balanced MPS aiming to attain maximum economic growth by ensuing sufficient credit flow for productive sectors and bringing down the inflation rate to 7.5 per cent by the end of FY `13.
Excepting the month of October last, the BB bought US dollars from the banks each month to keep the inter-bank foreign exchange (forex) market stable.
A total of $2.976 billion has been purchased from the commercial banks during the period under review as part of the central bank’s intervention in the market, the central bankers added.
BBN/SSR/AD-18Feb13-2:25 pm (BST)
