The US dollar has continued rising and hit a record high against Taka on rising trend of import payments and slowdown of remittance inflow.
Dollar value is increasing by 2-5 paisa almost every day against Taka in the inter-bank. On Tuesday, the US dollar was quoted at Tk 85.70. It was sold at Tk 84.81 per dollar in the interbank currency market on August 2.
Dollar rate increased by 04 paisa in November, 17 paisa in October, 30 paisa in September and 39 paisa in August this year respectively.
The dollar was even sold for about Tk 91 in the money exchange market on Tuesday.
Despite Bangladesh enjoying a consolidated position in forex reserves, the dollar continues to be stronger, becoming even more expensive in recent times, experts said.
The country’s forex reserves were above 46 billion dollars on Tuesday.
In a span of three months, the currency of Bangladesh has lost almost 89 Poisa against the US dollar.
Experts said the supply of dollars in the country increased due to the increase in remittance inflows as well as the decline in imports.
Bangladesh Bank bought a record amount of dollars from the market fearing the price fall due to the increased supply, they added.
However, this scenario has changed as the second wave of the corona pandemic continues to weaken, they mentioned.
Prices of greenback have risen to the highest level as demand for the dollar from banks has picked up as imports have started rising again.
The price hike could not be controlled even though it started selling dollars to banks to control prices.
Md Serajul Islam, Bangladesh Bank executive director and spokesman, said, “Imports of all kinds of industrial raw materials, capital equipment and other products are increasing. The Corona situation is becoming normal in different countries of the world including Europe-America. Production is in full swing in Bangladesh amid the Corona epidemic. As a result, the demand for dollars has increased in the market.”
The central bank is selling dollars according to market demand, he said.
DrAtiur Rahman, former governor of Bangladesh Bank, told Bangladesh Post, Bangladesh Bank's intervention is playing a vital role in protecting the interest of the exporters as well as the remitters amid the Covid-19 pandemic.
Bank officials said the wheels of the economy are moving again with the second wave of the Corona easing.
Many banks have increased their buying of dollars out of the possibility that the dollar may rise in the future, they said, adding that their fear is that remittances will go down.
As a result, the supply of dollars will not be the same as before, they mentioned.
Moreover, the import-export trade will return to normal, they said, adding that the demand for dollars will also increase.
Banks are increasing the amount of dollars they hold to themselves in order to supply extra dollars, they said.
Salehuddin Ahmed, former governor of Bangladesh Bank, said that exporters get benefits if the currency is devalued, but there is a risk of inflation due to rising import costs.
Bangladesh Bank is now trying to fix the situation by artificially trading dollars, he said adding that, however, the central bank should conduct a survey in this regard.
However, the country’s remittance inflow has continued declining every month in the current fiscal year.
The remittance inflow declined by $79 million to $1.65 billion in October 2021.
This flow stood at $1.87 billion in July, $1.81 in August, $ 1.73 in September and $1.64 in October in the current fiscal year respectively.
On the other hand, settlement of LCs increased by 45.3 percent to $10.76 billion in July-August in the current fiscal over the same time of previous fiscal, according to central bank data.