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The amount of cash outside the country’s banks soared to record Tk 2,42,026 crore in July as people held cash in their hands to meet rising living costs.
Bangladesh Bank data showed that cash outside banks hit its highest in April when it was at Tk 2,36,791 crore.
The amount of cash outside banks or cash in hands was the highest in April when people started struggling with rising commodity prices.
The amount of cash outside the banking system was Tk 2,36,448 crore in June 2022 and Tk 2,09,517 crore in June 2021.
The amount has gradually increased since October 2021 when it was Tk 2,05,895 crore.
General inflation shot up to 6.29 per cent in April, which was the highest in 18 months.
In June, inflation reached 7.56 per cent which was the highest after nine years amid persistent high food prices and non-food prices.
General inflation crossed 6 per cent in December 2021 for the first time in 14 months.
After the Russia-Ukraine war began in March, the economy was hit by global supply chain disruption, hike in raw materials, currency devaluation and commodity price spiral.
People wanted to have more cash money in their hands in recent months as a precautionary measure, said bankers.
They said that an increased amount of cash in hands limited money circulation in the banking system.
They also said that currency outside banks usually rose when the amount of excess liquidity or money supply in the banks increased.
But, excess liquidity and money supply in banks dropped in July while money outside banks increased sharply as people withdrew their savings to meet the rising living costs, they said.
The surplus liquidity fell after the country’s import payments increased due to global supply chain obstacles.
The circulation of M2 broad money declined to Tk 17.07 lakh crore in July against Tk 17.08 lakh crore in June.
Excess liquidity dropped to Tk 1,89,910 crore in July from Tk 2,03,424 crore in June.
The excess liquidity increased to Tk 2,31,711 crore in July 2021.
Reserve money declined to Tk 3,44,931 crore in July from Tk 3,47,162 crore in June.
Besides, a section of people with surplus funds stayed away from banks due to lower interest rates.
The weighted average interest rate on deposits of all banks was 4.04 per cent in July.
The bankers said that more money remained outside the banking system and so more transactions would take place in cash.
(NA)
