Bangladesh Bank (BB) has sold $2.16 billion to different commercial banks since July 1 of the current fiscal. 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, BB officials said.
The dollar crisis in the banks persists as the government is spending huge amount of money for importing capital machinery meant for the ongoing mega projects, including Rooppur Nuclear Power Plant, LNG terminal, and fuel and oil based power plants, they added.
Amid constant efforts to make the forex market stable, the BB has sold $2.31 billion to commercial banks in 2017-18 fiscal, which was the highest since 2009-2010 fiscal, while the BB gave only $175 million in 2016-2017 fiscal. Experts said the local currency taka mainly depreciated against US dollar as import payment has significantly increased in recent months which pushed the current account deficit higher.
They said the regular foreign exchange support from the central bank to commercial banks has put pressure on the foreign exchange reserve. However, export earnings and remittance inflows grew 12.57 percent to $30.90 billion and 9.75 percent to 11.81 billion respectively during July-March period in the current fiscal. On the other hand, import payments rose to $42.36 billion during the July-March period of FY 19 from $40.30 billion in the corresponding period of the last fiscal.
Market analysts said the foreign exchange market will face a huge demand of greenback further for higher import payment to meet necessary items ahead of Ramadan and Eid ul-Adha. They mentioned many people go abroad to celebrate Eid festival with dearest and nearest ones to bring greenback for visiting and shopping purpose, which are also creating pressure in the foreign exchange market.
Therefore, the reserve has been fluctuating between $31 billion and $33 billion for a long time. In May 08, 2019, the reserve was almost $31 billion. Eminent economist and former BB governor Dr Salehuddin Ahmed said the foreign exchange market has recently faced dollar crisis due to increased import pressure.
The central bank should not intervene by selling US dollar in the 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 to get higher export earnings for traders.
In this case, the government should find out proper indicatives how remittance and export can be increased side by side unnecessary imports can be reduced, he added. Adel Haque, former joint director of the central bank, told Bangladesh Post that the government and the central bank have provided very good support to stabilise the foreign exchange market.
The depreciation of local currency against US dollar during 2015-2016 and 2016-2017 fiscals, because of falling remittance growth, had worried both the central bank and the government, he said. “Bad days no longer exist as constant growth in remittance inflow and export earnings have contributed greatly to make the forex market stable,” he said.