High remittance growth and boost in export earnings backed by the government’s time-befitting initiatives have helped stabilise the market, bankers said.
Taka has remained stable against US dollar as Bangladesh Bank sold US dollar directly to the commercial banks to meet higher import payments.
On Wednesday, the exchange rate of US dollar was quoted at Tk 84.50 since May 06, 2019 while it was depreciated by 60 paisa during January-April in 2019.
Last year, the local currency was devaluated by Tk 1.20 to Tk 83.90 against the greenback.
However, the US dollar rate was stable at Tk 83.75 in the first three months (July, August and September) and December in 2018 while it was appreciated by 10 paisa to Tk 83.85 in October, 5 paisa to Tk 83.90 in November in the same year.
A senior BB official said the central bank sold the US dollar to commercial banks to reduce pressure on dollar to settle import payment obligations.
The central bank has been providing good support to stabilise the foreign exchange market, he said, adding it will continue in the coming months.
He said the foreign exchange market has been enjoying stability for the last few months as a result of steady remittance inflow and increased export earnings.
However, export earnings and remittance inflows grew 11.92 percent to $37.75 billion and 11.74 percent to $15.50 billion respectively in the first 11 months of fiscal year 2018-19, while import payment rose by only 6 percent to $50.51 billion.
A BB official said the depreciation of local currency against US dollar since the 2016-2017 fiscal year has been a cause of worry for the central bank and the government.
Economists said, ‘the foreign exchange market has been intervened by the central bank, which is not always good for the market.’
They said the local currency’s depreciation is not always bad because it helps to encourage exporters and remitters to bring more money at home, which is good for the country.
Adel Haque, former joint director of the central bank, told Bangladesh Post that the government and the central bank have provided good support to stabilise the foreign exchange market.
“Bangladesh’s export earnings and remittance have recently rose significantly, and export earnings also helped stabilize the foreign exchange market,” he added.
He mentioned that Bangladesh has enough foreign exchange reserves to support commercial banks, which is equivalent to import payment for more than six months.
BB Governor Fazle Kabir has recently said, “The central bank has intervened the foreign exchange market to keep rate of taka against US dollar stable.”
That is why, the central bank gave dollar support to commercial banks to meet higher import payment, he added.
Although, depreciation of the local currency helps exporters and remitters, but it affects negatively the country’s economy, he said adding that, hence, the government has given cash incentive to exporters and remitters to take advantages on the global market.