Published at: The Financial Express, March 11, 2019
The exchange rate of the Bangladesh Taka (BDT) depreciated further against the US dollar (US$) on Sunday, mainly due to higher demand for the greenback in the market for settling import bills.
The local currency depreciated by five poisha in the country’s inter-bank foreign exchange (forex) market on the day after nearly two weeks, market operators said.
The US dollar was quoted at Tk 84.20 each in the inter-bank forex market on the day against Tk 83.15 of the previous working day, they added.
On February 25, the local currency depreciated by three poisha in the inter-bank forex market on the same ground, when the US currency was quoted at Tk 84.15 each in the forex market against Tk 83.12 of the previous day.
The local currency faced such depreciation, although the Bangladesh Bank (BB) sold US$ 44 million to the commercial banks in the last week to keep the forex market stable.
“We’re providing liquidity support by selling the greenback to the banks directly to keep the forex market stable,” a senior official of the central bank told the FE.
A total of $1.71 billion has been sold since July 01 of the current fiscal year (FY), 2018-19, to the commercial banks as part of BB’s ongoing support, according to latest official figures.
The central bank may continue providing such foreign currency support to the banks in line with the market requirement, the BB official hinted.
The BDT depreciated by 30 poisha against the greenback in the inter-bank forex market from January 03 to March 10, mainly due to higher demand for the greenback, according to the market operators.
The US dollar was quoted at Tk 84.20 each in the inter-bank forex market on the day against Tk 83.90 on January 02.
On Sunday, the exchange rate of BDT depreciated by five poisha against the US currency at customer level for settling import bills.
The exchange rate of the US dollar rose to maximum Tk 84.25 each for sale of Bill for Collection (BC) on the day, from maximum Tk 84.20 of the previous working day, the market operators added.
“Such depreciation helps boosting export earnings and inward remittance flow,” another central banker explained.
He also said it will also help increasing the government’s revenue collection, particularly from imports.
The demand for the US dollar is gradually increasing, mainly due to higher import payment pressure, particularly of capital machinery for power plants, intermediate goods, petroleum products, fertilisers and liquefied natural gas (LNG).
“The trend in our forex market is now on the right track,” M A Halim Chowdhury, Managing Director and Chief Executive Officer of Pubali Bank Limited, told the FE while explaining the latest situation on the forex market.
Echoing the BB’s official, the senior banker also said such depreciating mode of the local currency will help increase the inflow of foreign exchange in Bangladesh.
He also expects that the inflow of foreign exchange will increase significantly ahead of the holy Ramadan.
Talking to the FE, another senior executive at a leading private commercial bank said import cost will increase in the near future following such depreciation of the BDT against the greenback.
“Inflationary pressure may increase on the economy in the coming months, if such depreciating mode of the BDT against the US dollar continues,” he noted.