Written by The Banking Post
The interbank call money rate climbed above 11 percent on Monday as banks faced increased demand for cash ahead of Eid-ul-Adha.
Market operators said the rate ranged between 9.95 percent and 11.25 percent, compared with 9.95 percent to 11.05 percent in the previous session. Most transactions were settled between 10.50 percent and 11.00 percent.
The weighted average rate (WAR) rose to 10.63 percent from 10.19 percent in the previous working day. A week earlier, the rate stood at 10.03 percent.
Bankers said short-term borrowing costs usually rise before major festivals such as Eid-ul-Adha and Eid-ul-Fitr due to a sharp increase in cash demand.
Turnover in the interbank call money market also increased to Tk 47.33 billion on Monday, up from Tk 42.84 billion in the previous session.
“We’re closely monitoring the market to ensure stability ahead of Eid,” a senior Bangladesh Bank official said.
The official added that liquidity conditions are expected to improve from Tuesday through repo support and fund injections linked to the central bank’s dollar purchases from commercial banks.
On Monday, Bangladesh Bank bought another $100 million from six banks through auction in the interbank spot market to help stabilise the exchange rate. The purchase was made under the multiple price auction method at a cut-off rate of Tk 122.75 per dollar.
Since July 13 last year, the central bank has purchased nearly $5.98 billion directly from banks under the current market-based exchange rate regime.
A senior treasury official at a leading private commercial bank said heavy Eid-related cash withdrawals, combined with payments of around Tk 90 billion against treasury bills issued on Sunday, added pressure on the money market.
However, bankers expect the call money rate to ease below 11 percent in the coming sessions as liquidity support measures take effect.
