Dhaka, Bangladesh (BBN) – The inter-bank call money rate shot up to 18 per cent on Tuesday because of rising pressure for withdrawal of fund ahead of the Eid-ul-Fitr festival, treasury officials said.

The call rate ranged between 8.0 per cent and 18 per cent on the day against 6.50 per cent and 12.00 per cent of the previous day. However, most of the deals were settled between 12.00 per cent and 15 .00 per cent.

The call money rate rose on Tuesday morning as some banks faced sudden shortfall of liquidity because of withdrawal of funds by corporations and business establishments seeking to pay festival bonus to their employees.

However, the rising trend in call rate was halted by injection of fresh fund worth Tk 3.30 billion on the day by the central bank through the repurchase agreement (Repo) auction, they added.

“We’ve strengthened our monitoring to keep stable the country’s inter-bank money market ahead of the Eid festival,” a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN in Dhaka.

He also said the central bank will use its tools like Repo auction in line with the market requirement that would help pull down the call money rate.

The overnight borrowing normally shoots up before Eid festivals when demand for cash from retail clients rises considerably.

Excess liquidity with all scheduled banks stood lower at BDT 129.88 billion by the end June last against BDT 142.79 billion at the end of June 2007, according to the central bank statistics.

BBN/SI/SI/AD-16September08-9:42 PM