The Bangladesh Bank (BB) has again strengthened its foreign currency support to commercials banks to settle the import payment obligations.
The central bank directly sold about US $200 million to the banks in the current fiscal year while US $45 million was injected in one week, in an effort to meet growing demand for greenback. However, the BB sold US $2.31 billion directly to banks in the last fiscal year. In the fiscal year 2016-17, the BB sold only $175 million to banks for settling import payments.
Although the foreign exchange market has been enjoying stability for last three months, the market has faced huge crisis of US dollar as import payments, especially for food grains, capital machinery and petroleum products, have significantly increased in the recent months.
The local currency has depreciated by 5 paisa to Tk 83.80 against US dollar last week while it had been unchanged to Tk 83.75 since 18 June 2018.
A senior BB official said the central bank sells dollar to commercial banks on a regular basis to help them settle their import payment obligations.
The central bank has been providing a very good support to stabilise the foreign exchange market, he said adding that it will continue in the upcoming months.
Adel Haque, former joint director of the central bank, told Bangladesh Post, “The steady growth in remittance and export earnings side by side the BB’s good initiatives have helped stabilise the market, otherwise, there was a possibility of a large depreciation of the local currency against the greenback in the foreign exchange market.” Eminent economist and former BB governor Dr Salehuddin Ahmed told Bangladesh Post that the foreign exchange market has recently faced dollar crisis due to an increased import pressure.
The central bank should not intervene by selling US dollar in the foreign exchange market all the time, Ahmed said adding that the strong dollar rate against taka will encourage expatriates to send more remittance home side by side helping get higher export earnings for traders.
In this case, the government should find out proper indicatives how remittance and export can be increased by reducing unnecessary imports, he added.
The depreciation of local currency against US dollar since the 2016-17 fiscal has been worrying for the central bank and the government.