Call money rate rising ahead of Eid-ul Azha

The inter-bank call money rate is increasing despite the Bangladesh Bank injecting funds into the money market ahead of Eid-ul-Azha.

The weighted average call money rate stood at 4.57 per cent on Monday, up from 4.54 percent a day ago, the central bank data shows.

The inter-bank call money rate has been rising in the last few days while Eid will be celebrated in the country on July 10.

After a slight fall, the call money rate started to rise further on June 30, the central bank data shows.

Bankers said people were withdrawing more money from banks ahead of Eid, which was creating pressure on the money market.

They also said the pressure on the foreign exchange market, surging import payments, and a boost in business ahead of Eid were the main reasons behind the rising inter-bank call money rate.

The call money rate is the interest rate on a type of short-term (overnight) loan from one bank to another to meet emergency needs.

Earlier in April, a drop in surplus cash in the banking system sent the inter-bank overnight call money rate to a 20-month high as banks scrambled to borrow short-term money for meeting their treasury requirements ahead of Eid-ul-Fitr.

A high official at the treasury department of a state-run bank told The Business Post at the time, “Banks were sitting on cash during the coronavirus pandemic but are now facing a shortage of cash, sending the call money rate to a new high.”

Chief Economist of the Bangladesh Bank Md Habibur Rahman said at the time, “The situation is not so bad now. We are always ready to support the money market in any tight situation.”