Bangladesh Bank will release Tk 200 billion before two big religious festivals – Eid-ul-Azha and Durga Puja – to prevent volatility on the call money market by increasing cash flow to the banks.

Of the amount, Tk 80 billion are newly printed notes while the rest Tk 120 billion will replace old and mutilated notes, said central bank sources.

BB Governor Dr Atiur Rahman assured that the call money rate before Durga Puja and Eid-ul-Azha will remain stable as the central bank has taken initiatives to ensure adequate supply of cash.

“I hope the market will remain stable this year,” he said while speaking at a seminar in the city Saturday.

The central bank sources claimed that BB has a reserve of Tk 230 billion cash against the banks’ total demand of Tk 190 billion this year.

On the occasions of Eid-ul-Azha and Durga Puja, the demand for cash usually gets increased every year.

Hindus’ Durga Puja will be held from 15th to 24th October while Muslims’ Eid-ul-Azha is likely to be observed on 26th October depending on moon sight.

This year, the central bank has received a demand of Tk 190 billion cash from the country’s banks to meet the hectic rush of clients before the festivals.

As the demand for cash gets intensified before festivals, the call money market faces supply crunch and becomes volatile, leading the interest rates to go high, said a senior BB official.

In 2010, the call money rate unusually skyrockets to 175 percent before Eid-ul-Azha.

After that, the country’s call money rate remains relatively stable as the central bank proactively interferes to maintain sufficient supply of local currency.

Before last Eid-ul-Fitr in August, the call money market was almost calm as the central bank supplied Tk 170 billion to the banks.

Over the last couple of days, the inter-bank call money rate ranges between 7 and 9 percent. The BB data shows the weighted average call money rate on last Thursday was 7.46 percent.

News: The Daily Sun/Bangladesh/7th-Oct-12