To stabilize the foreign exchange market, Bangladesh Bank has continued to sell dollars to banks
The foreign exchange market has been going through volatility owing of the extending demand-supply gap of US dollars.
To stabilize the foreign exchange market, Bangladesh Bank has continued to sell dollars to banks.
As of January 16, 2019, the inter-bank exchange rate of the US dollar stood at Tk83.95, up from Tk78.88 two years earlier, increasing almost by Tk6.
To stabilize the foreign exchange market, the central bank has sold $1.22 billion to banks this fiscal year, as of January 14, 2019.
In the previous fiscal year of 2017-18, the central bank had sold $2.31 billion to the commercial banks.
Due to more selling, foreign exchange reserves stood at $31 billion as of January 16, 2019, down from $32.27 billion a year earlier.
Experts and bankers said currently there are several mega projects being implemented in the country.
Additionally, import of raw materials and other commodities will increase for the demand of businessmen.
So the country’s foreign exchange market might see more volatility in the coming days, they remarked.
Talking to the Dhaka Tribune, AB Mirza Azizul Islam, a former advisor to the caretaker government, said that currently the country’s export and remittance earning has increased slightly.
“The volume of foreign exchange reserves is now sufficient to make import payments of more than five months. If the import costs increase more than the export and remittance earnings, problems may arise,” he said.
Md Arfan Ali, managing director of Bank Asia told the Dhaka Tribune that rising exchange rates put pressure on inflation as the price of imported goods will increase.
The devaluation of the local currency puts pressure on the liquidity market as the settlement of letters of credit will require more money, he added.
He also said there will be pressure on the dollar in the coming days for implement the mega projects.
“As the general election ended recently, private investment will now grow. There will be a lot of pressure on the dollar. In this case, the Bangladesh Bank should continue to sell the dollar,” Agrani Bank Chairman Dr Zaid Bakht told the Dhaka Tribune.
According to Bangladesh Bank data, in the first five months of the fiscal year, export earnings stood at $16.77 billion against the import payments of $23.43 billion.