Despite having reached highest forex reserve, dollar continues to be stronger - becoming even more expensive in recent times while value of Taka continued to fall against US dollar.
In a span of two and a half months, the currency of Bangladesh has lost 55 Poisa against the US dollar. Economists said there is no cause for concern as the country has adequate reserves.
The dollar remained stable in the same place for more than a year during the coronavirus epidemic. The dollar started appreciating against the Taka from August 2.
Dollar value is increasing by 2-6 paisa almost every day against Taka. On Tuesday day, the US dollar was quoted at Tk 85.35. It was sold at Tk 84.81 per dollar in the inter-bank currency market on August 2.
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.
The central bank has sold $600 million to the scheduled banks in the second month of the 2021-22 financial year to stabilize the forex market since the first week in August.
Dr Atiur Rahman, former governor of Bangladesh Bank, told Bangladesh Post, “The central bank has provided good support to the forex market that includes providing an easy system giving remittance to remitters as well as selling or buying dollars directly from the market, which have helped to make the forex market stable.”
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, he added.
“This is the highest monthly remittance received in the country’s history that helped push foreign currency reserves up, which is helping the rating of the country across the World,” he mentioned.
Bank officials said the wheels of the economy are moving again with the second wave of the Corona.
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.
“If the survey shows that if the Taka depreciates against the dollar, inflation is likely to rise further, then it would not be right to let it fall further. Due to the epidemic, inflation is skyrocketing in all countries of the world, including the United States and the United Kingdom. We have to be careful that this does not happen here,” he mentioned.
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. 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 of dollar increased in the market.”
“The central bank is selling dollars according to market demand,” he said adding that the dollar was bought to keep the market stable for so long. Now it sold for the same reason, he mentioned.
However, the foreign exchange reserve has hit a record high to stand at $48.06 billion last month.