Call money rate hits 14pc
Interest rate in call money market yesterday rose to 14 percent from the previous day's 8.5-9.5 percent, according to the fund managers of commercial banks.
They attributed this rate hike to big LC (letter of credit) payment by a government-owned bank and increasing withdrawal of savings.
“Sonali Bank has made a Tk200 crore payment either for import of oil or fertilizer and the money remains blocked at the Bangladesh Bank (BB),” said a fund manager of a private commercial bank (PCB).
He also blamed the rise in advances by PCBs for a jump in the call money market. “Small savers are also withdrawing their money, perhaps to meet their demand in the wake of soaring prices of essentials,” he added.
Another fund manager of a foreign bank was of the identical view on the call money rate hike.
He, however, said the central bank has started pumping Tk 1,000 crore into the market by repo to meet the market demand.
“As far as I know, the Bangladesh Bank (BB) has injected about Tk 400 crore Wednesday into the market to ease the situation,” he said.
Nationalised commercial banks (NCBs) still are still the major players in the money market. So a big payment by an NCB can make the money market volatile, market players remarked. NCBs have about 45 percent shares in the money market.
The banking sector was flooded by huge surplus funds throughout 2007, as investors were not coming up to take loans due to the changed political situation.
But the situation got reversed at the onset of the year 2008. The private sector credit growth reached over 17 percent during the January-March period.
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