The call money rate in the financial market came down to 5.65% in the second week of current month, a paradigm shift from the regular trend of rate hike particularly ahead of Eid ul-Fitr, the biggest festival of Muslim community.
The downturn is attributed to excess liquidity prevailing in the market.
The weighted average call money rate was 5.79% at the end of June.
On the other hand, Bangladesh Bank continued to mop up money from the market through reverse repo even ahead of the festival when usually banks are supposed to borrow money from the central bank through repo.
The central bank mopped up Tk16,000 crore from the financial market on Thursday last while repo was zero.
BB is counting huge interest against reverse repo as above Tk10,000 crore is being mopped up per day from the market for the last three months, said a senior executive of Bangladesh Bank.
“The central bank will count loss due to reverse repo,” said Bangladesh Bank Change Management Advisor Allah Malik Kazemi.
He said banks usually borrow money from the central bank ahead of festival to meet up the market demand but the scenario is opposite this time as the market is awash with liquidity.
The call money rate is far below the repo rate 7.25% which kept the banks away from borrowing through repo, he said.
The call money rate was declining continuously from 8.57% in January as well as deposit and lending rate, according to the Bangladesh Bank data.
It went up to 8% during the last Eid festival and a plenty of money was borrowed from Bangladesh Bank through repo by the banks.
The deposit rate came down to 7% in May from 7.26% in January while lending rate dropped to 11.82% from 12.32% during the same period.
Despite significant fall in lending rate, private sector credit growth remained steady ranging between 13% and 13.6% over the last six months.
The private sector credit growth slightly rose to 13.6% in May from 13.3% in April this year.
The public sector credit growth remained negative even in June, said Bangladesh Bank source.
The growth rate remained negative since February and stood at negative 2.7% in May, according to the central bank data.
