Unlike previous years, the interbank call money market looks stable ahead of this year’s Eid-ul-Fitr festival.

Treasury officials said, though cash withdrawal from banks has been increasing for the past two weeks, the call money rate did not rise proportionately due to the central bank's prudent role.

Most of the deals in the call money market were settled at 10.50 percent yesterday, down from Monday's 10.70 percent, officials said.

The total turnover in the market also showed a declining trend, according to Bangladesh Bank (BB) data.

The turnover in the market was Tk 7,521 crore yesterday, down from Tk 7,605 crore on Monday and Tk 8,218 crore on Sunday.

“The market looks very stable this year with no significant liquidity shortage,” said Motiur Rahman, head of treasury at Prime Bank.

"The central bank's active role, including pumping money into the market, helps the market remain calm,” said Rahman.

The BB on Monday injected fresh funds worth Tk 14,208 crore

through auction of repurchase agreement (repo) and special liquidity support to the primary dealer banks. On Sunday, the central bank injectedTk 13,500 crore.

The BB has also provided fresh fund through purchasing the US dollar from the commercial banks directly to keep the exchange rate of the taka stable against the greenback.

According to BB data, the central bank has bought nearly $900 million from the market during the period between the last week of June and Monday, and the market got liquidity of more than Tk 7,300 crore.

"We see no problem with liquidity this year,” said a treasury official of Jamuna Bank.

The inter-bank call money market is an overnight market, which mainly serves commercial banks and non-bank financial institutions (NBFIs) in meeting their immediate liquidity needs and reserve deficiencies.

Generally, call rate shoots up during the Eid festival due to a rush in withdrawal of deposit. The demand for cash forces banks and NBFIs to borrow from the overnight money market during the festival. An official of the debt management department of the BB said private and foreign commercial banks and NBFIs have reduced their borrowing from the call money market since January this year, but the state-owned banks keep on borrowing.

“The state banks have increased their borrowing since July to meet the demand for cash, mostly for lending the government,” said the BB official.

Among all the commercial banks and the NBFIs, Sonali Bank topped the borrowers’ list with Tk 79,462 crore between January 1 and July 19, according to the BB.

Agrani Bank was the second highest borrower till July 19 this year. The bank borrowed Tk 75,950 crore from the market.

sajjad@dailystar.net