Dhaka, Bangladesh (BBN) – The inter-bank call money rate hit 25 percent on Thursday following squeezing liquidity recently by the central bank.
“The call money rate has increased following squeezing liquidity support through repurchase agreement (Repo) auction recent day by the central bank,” a senior treasury official of a commercial bank told BBN in Dhaka.
On Thursday, the central bank received eight bids of three-day tenure amounting to a total of BDT 13.4313 billion. But the Bangladesh Bank (BB) provided BDT 3.3578 billion against the bids, according to the central bank auction result.
The call rate ranged between 5.50 percent and 25 percent on the day against 7.00-18.50 per cent of the previous working day. However, most of the deals were settled at rates varying between 20 percent and 25 percent, the treasury officials confirmed.
“We may stop providing liquidity support shortly to the banks and non-banking financial institutions (NBFIs) through Repo auction in line with the existing monetary policy,” a BB senior official said, adding that the central bank has taken the latest move against the backdrop of rising trend in inflation as well as broad money supply in the market.
The treasury official also said the liquidity demand has been created gradually because of withdrawal of fresh fund from the market by the central bank through issuing treasury bills during September-November period.
Currently, three T-bills are being transacted through auctions to adjust the government borrowing from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Besides, some commercial banks have bought US$374 million from the central bank to settle their import payments during the last two months, the BB data showed.
BBN/SI/SSR-03Dec10-1:10 am (BST)