Dhaka, Bangladesh (BBN) –The ongoing upward trend of inter-bank call money rate is likely to continue on Thursday, the last working day before the Eid vacation, following higher withdrawal of cash from the banks.

Customers are also withdrawing a significant amount of funds from banks on the occasion of Eid-ul-Azha to meet the expenses for buying sacrificial animals and other expenditures.

The weighted average rate (WAR) on call money rose to 5.48 per cent on Wednesday from 4.88 per cent of the previous working day, according to the central bank’s latest statistics. It was also 4.57 per cent on Monday.

Such a short-term borrowing normally increases before festivals, as demand for cash grows.

However, the volume of transactions in the inter-bank call money market may fall further today (Thursday) as some banks is providing funds to other cash-hungry banks with offering higher interest rates in the name of ‘short notice deposit (SND)’.

The total amount of transactions in the inter-bank call money market came down to BDT 86.87 billion on Wednesday from BDT 95.24 billion of the previous working day, the official data showed.

The call money rate ranged between 4.25 per cent and 6.00 per cent on the day against 4.00-6.00 per cent on Tuesday.

Most of the deals were settled at rates varying between 4.50 per cent and 5.50 per cent, according to market operators.

Actually, the banking sector of Bangladesh is now under liquidity stress as most of the banks are buying US dollars from the central bank to settle import payment obligations,

Meanwhile, excess liquidity in the country’s banking sector stood at BDT 1891.83 billion as of May 2022, down 11 per cent year-on-year.

Besides, the Bangladesh Bank (BB), the country’s central bank, has already hiked its policy rate twice within a month to curb the inflationary pressure o the economy.

The policy rate, which is followed by banks to fix their interest rates on both loans and deposits, was raised by 50 basis points to 5.50 per cent on June 30.

The market operators, however, expect that the call money rate might be stabilized after the Eid.