Dhaka, Bangladesh (BBN) – The central bank may continue its liquidity support to the commercial banks and financial institutions aiming to keep call money rate stable ahead of the Eid festival, officials said.

“The central bank may continue our liquidity support to the banks and non-banking financial institutions (NBFIs) through open market operations to keep the money market stable ahead of the Eid festival,” a senior official of the Bangladesh Bank (BB) said, adding: “This is a temporary measure. When the market will turn around then the measure may be suspended.”

Under the operations, the central bank is injecting fresh fund in the market through strengthening repurchase agreement (repo) auction and special liquidity support for the primary dealers (PDs).

The inter-bank call money rate shot up on Thursday as increased demand for liquidity on the eve of Eid-ul-Azha festival, treasury officials said.

The call rate ranged between 9.50 per cent and 20 per cent on Thursday against 3.50-9.00 per cent of the previous working day. However, most of the deals were settled at rates varying between 15 per cent and 16 per cent, the market operators confirmed.

“The call money rate may ease shortly following the BB’s intervention in the money market,” a senior treasury official of a commercial bank told BBN in Dhaka.

On Thursday, the BB injected fresh fund amounting to Tk 9.959 billion through repo auction at 5.50 per cent aiming to keep the inter-bank money market stable on the day.

On the other hand, the central bank also provided funds to the tune of Tk 24.9827 billion at 5.50 per cent to PDs in line with assured liquidity support.

The central bank earlier selected 15 PDs – 12 commercial banks and three NBFIs – to handle government-approved securities in the secondary market.

BBN/SSR/AD-14Nov10-9:58 am (BST)