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Eid pushes up call money rate


Bangladeshpost
Published : 06 Aug 2019 10:53 PM | Updated : 03 Sep 2020 08:57 AM

The call money rate significantly increased in the interbank call money market amid a cash withdrawal pressure faced by banks ahead of Eid-ul-Azha. 

The interbank call money rate surged on the market between 4.25 percent and 5 percent in the first week in August while it was only 0.10-1.50 percent in the same period of previous year, Bangladesh Bank (BB) sources said.

Even, this rate was witnessed between only0.75 percent and 2.3 in the middle in July in this year, they said.

On Tuesday, the weighted average of call money rate increased to almost 4.5 percent from only 1.50 percent in the same day of previous year, they added.

On the other hand, the cash transaction also rose by 31.28 percent to Tk 25,379 crore in first three working day in August from Tk 19,331.8 crore on the same period in July, 2019, according to Bangladesh bank (BB) latest data.

This flow was 28.25 percent higher than the same period of previous year, data. Nazrul Islam, Treasury Head and Principal Officer at the Islami Bank Bangladesh Limited, told Bangladesh Post that the interest rate has went up in the call money market as clients had withdrawn huge cash from banks ahead of Eid-ul-Azha.

He said, “This rate is still tolerable and the call money rate to remain stable during Eid-Ul-Azha as banks have enough liquidity to meet customer’s demand.”

The rate will come down after Eid vacation, he added.  

The majority of the banks were now sitting on excess liquidity, which helped the call money market to remain stable, he said, adding that, otherwise, this rate would have increased further.

BB Governor Fazle Kabir has recently said, “There was no liquidity crisis in the bank. At present, liquidity is almost Tk 856 billion in the bank.”

Although all banks don’t have the same liquidity flow, he said adding that, some banks may have too much, and some banks may have less. Besides, interbank call money rate is also normal, which is now around 4 percent, he informed.