Bangladesh Bank (BB) has strengthened its foreign currency support to commercials banks for settling import payment obligations, BB officials said.
As part of its move, the central bank sold $974 million to banks in an effort to stabilise the forex market since July 1 in the current fiscal year, the officials added.
The central bank directly sold $2.31 billion to the banks in the last fiscal to meet growing demand for
greenback. A BB senior official said the commercial banks have faced huge pressure of greenback to settle higher import payments especially for capital machinery and petroleum products meant for ongoing development works.
Besides, because of higher demand US dollar, the greenback appreciated against taka, he added.
However, the US dollar rate was stable at Tk 83.75 in the first three months of the current fiscal year while it was appreciated by 10 paisa to Tk 83.85 in October, 5 paisa to Tk 83.90 in November in 2018-19 fiscal year.
To stabilise the market, the central bank has interfered to the foreign exchange market by giving dollar support to banks.
On the other hand, the foreign exchange support from Bangladesh Bank to commercial banks has pushed pressure on the foreign exchange reserve.
The reserve has fluctuated between $31 billion and $33 billion for
long time. At end of November, the foreign exchange reserve was almost $31 billion.
Adel Haque, former joint director of the central bank, told Bangladesh Post that the government and the central bank have provided very good supports to stabilise the foreign exchange market.
“Suitable remittance growth side by side excellent export earnings have helped stabilise the market,” he said.
“There is no possibility of a large depreciation of the local currency against the US in the foreign exchange market,” he added.
Eminent economist and former BB governor Dr Salehuddin Ahmed told Bangladesh Post the government should encourage traders to reduce unnecessary imports to absorb the growing trade imbalance.
It will help stabilise the market by increasing dollar supply, he added.