Dhaka, Bangladesh (BBN) - The central bank of Bangladesh is likely to continue its liquidity support to the banks and financial institutions during the holy month of Ramadan as the inter-bank call money rate moved up in the last week.
"The central bank has already started providing liquidity supports to the banks and non-banking financial institutions (NBFIs) to ease the cash money demand situation in the market ahead of the Eid-ul-Fitr," a senior official of the Bangladesh Bank (BB) said.
The BB has provided the liquidity support through repurchase agreement (repo) auctions to the banks and NBFIs, he said, adding that primary dealer (PD) banks and NBFIs have also received cash money under liquidity support facility.
The PDs are entitled to receive such cash money support to meet their liquidity demand against devolved treasury bills and bonds.
The BB earlier selected 15 PDs -- 12 banks and three NBFIs -- to handle government-approved securities in the secondary market.
"The supports will be continued until the Eid festival in line with the market demand," the BB official added.
Call money rate that started at around 5.00 per cent at the beginning the last week increased to around 8.00 per cent at the end of the week. However, most of the deals were settled at rates varying between 7.00 per cent and 7.50 per cent, the market operators said.
"The upward trend in call money rates may continue this week because of increasing demand for liquidity ahead of the Eid," a senior treasury official of a private commercial bank said, adding that the short-term borrowings normally increase before the Eid festival to meet the growing demands of the bank clients.
BBN/SI/AD-15Aug10-10:41 am (BST)
