There was acute liquidity crunch of USD in the local interbank market due to import payments of fuel and scrap vessels. As a result USD was bullish against Bangladeshi taka in this week and the rate of USD went up to one of its highest level against BDT.

Money Market

Bangladesh Bank issued BDT 2,028.00 million by the Treasury bill auction held on Sunday, compared with BDT 2,280.00 million in the previous week's bid. The weighted average yields of t-bills of different tenors fell few basis points.

The call money rate was volatile this week. The rate ranged between was 3.50-7.00 percent this week. The rate was 4.00-6.25 percent in the beginning of the week and ended the week at 3.50-4.00 percent.

International FX Market

The dollar tumbled in the beginning as bomb blasts in Turkey and Iraq heightened global security fears, encouraging investors to dump the US currency after a weeklong rally. The greenback, already on the back-foot after weaker than expected US economic data on Friday, extended losses after news that the head of Iraq's US appointed Governing Council had been killed by a car bomb at a checkpoint in Baghdad. The killing followed bomb explosions in Turkey on Sunday; just hours before British Prime Minister Tony Blair was due to arrive in the country. Euro rose to as high as $1.2060. The dollar's biggest losses came against the Swiss franc as soaring oil prices and tumbling stock markets sent investors running for cover.

The yen rallied broadly in the middle of the week on the back of a second straight day of Japanese equity gains, rising almost two yen versus the dollar and triggering a broader retreat by the US currency. Stocks ended sharply higher in Japan as renewed optimism about the country's economic recovery fuelled fresh demand after recent yen-hurting sell off. Analysts said the dollar's fall against the yen spilled over into other currency pairs, depressing the dollar more than half a percent on the day versus sterling and Euro and some 1.5 percent against the Australian and New Zealand dollars.

The dollar staged a rebound against other major currencies on Thursday, recouping some of the previous day's losses as investors returned to unwinding riskier trades in anticipation of higher US rates. Higher oil prices and stock market falls encouraged investors to continue moving out of the growth-oriented trades they have taken up over the past year which have been funded by low interest rate borrowing in the dollar. A fall in Japanese stocks helped push the yen lower along with a comment from Fitch credit rating agency, which said its outlook on Japan's rating would remain negative even though the economy is recovering. Euro was down 0.7 percent on the day. It was up 0.4 percent against the yen and 1 percent against the Swiss franc and Sterling.

-- Standard Chartered Bank