Bangladesh Bank (BB) has provided almost $300 million support to the commercial banks in an effort to stabilise the foreign exchange market, BB sources said. In light of huge crisis of greenbacks to meet higher import payments, the central bank has been providing very good support to commercial banks, and it will continue in the upcoming days, officials said.
The central bank has sold a total of $2.31 billion to the banks in the last fiscal to stabilize the market, while BB gave $175 million in the last fiscal year, according to BB latest data. Taking to Bangladesh Post, a senior official of BB, said the central bank has continued its foreign currency support to the banks to meet higher import payment obligations, including for food grains, fuel and capital machinery. The central bank might maintain its support to the banks as required by the market, he hinted.
A senior banker said the central bank provides constant support to stabilise the market. He said the depreciation of local currency against US dollar since the 2016-2017 fiscal has been a matter of concern for the central bank and the government. In span of one year, the local currency depreciated by Tk 1 to Tk 84.90 against US dollar.
However, the US dollar appreciated by Tk 1.60 in fiscal year 2017-18 and Tk 3.53 in fiscal year respectively. Market analysts said the foreign exchange market has been faced huge crisis of greenback as higher import alongside on the falling trend in the export income. On the other hand, foreign reserve has also faced pressure as the central bank sold US dollar directly to the commercial banks, they added.
The country's export income declined by almost 7.0 percent to $12.72 billion during the July-October period of fiscal 2019-20, from $13.65 billion in the same period of previous year. Meanwhile, the country's forex reserves stood at $31.72 billion on Thursday from $32.43 billion in October 31 this year for selling of greenback to the banks.
Former World Bank lead economist Zahid Hussain told Bangladesh Post that the central bank should not intervene the foreign exchange market as deduction of Taka against US dollar help local businesses to earn more money by exporting their products. A market adjustment of the exchange rate will help all exporters, protect domestic import substitutes and strengthen incentives for remittances, he added.
The government should encourage traders to reduce unnecessary imports to absorb the growing trade imbalance side by side the current account deficit for the time being, he said, adding that it will help stabilise the market by increasing dollar supply.