To meet the growing demand of greenbacks and stabilize the foreign exchange market, the central bank has been pumping the US dollar in the banking system for long
Four state-owned commercial banks are the major clients of US dollar sold by the Bangladesh Bank, as the public sector banks alone bought nearly 95% of the total $1.87 billion in the July-March period.
To meet the growing demand of greenbacks and stabilize the foreign exchange market, the central bank has been pumping the US dollar in the banking system for long, a top central banker said.
The need for buy and sell of US dollar became obvious, given that the dealing of greenbacks in the public sector banks rose abnormally in the recent period, as significant large infrastructure projects are being implemented through the banks concerned, he added.
Agrani Bank bought $763 million or 40.63% of the total amount sold by the central bank, followed by Sonali Bank with $566 million or 30.14%, Rupali Bank $225 million or 11.98% and Janata Bank with $211 million or 11.24%, according to latest data from Bangladesh Bank.
In the previous fiscal year the central bank sold $2.31 billion to the scheduled banks.
As of April 16, 2019, the inter-bank exchange rate of the US dollar stood at Tk84.35, up from Tk79.80 two years earlier, an increase of Tk4.55 per dollar.
“A number of mega projects are being implemented in our country now. Projects like Padma Bridge, Rooppur Nuclear Power Plant, Paira Sea Port, coal fired large scale power projects of Matarbari and Rampal, Metro Rail, and LNG terminal, involves huge foreign currency for importing construction materials,” Agrani Bank chairman Dr. Zaid Bakht told the Dhaka Tribune.
“State-run banks are financing these projects. So, the banks face severe crises of US dollar, and they buy from the central bank.”
Pointing to the growing demand of US dollar , he said Agrani Bank was funding the LNG terminal, and a number of large scale power sector projects.
Agrani Bank chairman said, it was possible for Agrani to meet the normal private sector demands of dollar with their own dollars, earned through export and remittance.
“But we are facing dollar crisis due to funding large government projects.”
State-owned Sonali Bank is the second largest dollar buyer after Agrani Bank. Sonali bank is financing several mega projects including Ruppur Nuclear Power Plant, according to Sonali Bank sources.
Talking to the Dhaka Tribune, Sonali Bank MD and CEO, Md Obayed Ullah Al Masud, said: “Due to a demand-supply gap, we have to face problems in opening LCs for big projects.”
“In this case, we have to increase foreign direct investments (FDI). If we get deferred payment opportunities in opening LCs for big projects, then there will be no problem.”
According to data from the Bangladesh Bank, the central bank sold $1.87 billion to commercial banks in the last nine months (July-March). BB sold $100 million in July, $10 million in August, $30 million in September, $290 million in October, $476 million in November, $218 million in December, $308 million in January, $228 million in February, and $218 million in March.
Among the private commercial banks, EXIM, Mercantile, Modhumoti, Social Islami and Trust Bank have bought dollars several times. However, the purchase of dollars by private banks are very low.