Dhaka, Bangladesh (BBN)- The inter-bank call money rate hit 10 percent on Sunday, the last working day before the Eid-ul-Azha festival, because of higher withdrawal of cash from the banks, treasury officials said.
“The call money rate increased slightly on the last working day ahead of the Eid mainly due to higher demand for cash from the banks,” a senior treasury official of a private commercial bank told BBN in Dhaka.
He also said the short-term borrowings normally increase before the Eid as the banks need to meet their clients’ growing demand for cash.
“We expect that the call money rate will ease after the Eid holidays,” the treasury official said, adding that there was no liquidity shortfall currently in the country’s banking sector.
The call rate ranged between 5.80 percent and 10.00 percent on the day against the previous range between 5.80 percent and 9.00 percent. However, most of the deals were settled at rates varying between 9.00 percent and 10.00 percent, the market operators said.
The weighted average rate of the call money rose to 9.14 percent Sunday from 8.16 percent of the previous working day, according to the Bangladesh Bank (BB) statistics.
“The call money rate was quite normal ahead of Durga Puja and Eid festivals,” a BB senior official said.
He also said the central bank has expedited purchase of the US dollar from the commercial banks ahead of the Eid-ul-Azha to keep the interbank foreign exchange (forex) market stable.
As part of the latest moves, the BB bought US$ 265 million from the banks directly during three working days in the last week to offset the higher supply of foreign exchange in the market before the Eid.
A total of $1.395 billion was bought from the commercial banks between July 1 and October 10 last of the current fiscal (FY) 2013-14 as part of the BB's intervention in the market.
However, the country's foreign exchange reserve stood at $ 16.70 billion on the day following the US dollar purchase.
BBN/SSR/AD-13Oct13-9:25 pm (BST)