BB buys $93m from banks to stabilise forex market

The central bank purchased US$93 million directly from commercial banks last week to help keep the country’s foreign exchange market stable, officials said.

The value of Bangladesh Taka (BDT) started gaining against the US dollar from January 12 last due to lower import payment pressure following the ongoing political impasse.

The BDT appreciated by 0.14 per cent against the US dollar last week that ended on Thursday, according to the treasury officials of commercial banks.

The US dollar was quoted at Tk 77.83-Tk 77.85 in the inter-bank foreign exchange (forex) market on the day against Tk 77.95 on January 11, 2015, they added.

“Political turmoil has adversely impacted on import payments lowering import payment pressures which led to lower US$/BDT rate,” a senior treasury official of a commercial bank told the FE.

He also said a significant amount of import payment was cleared in December last after depreciating the local currency against the greenback as pre-payments to avoid possible exchange losses by the importers.

“The supply side of the foreign currency has improved due to higher inflow of remittance along with rising trend of export earnings,” Kazi Sayedur Rahman, general manager of the Forex Reserve and Treasury Management Department of the Bangladesh Bank (BB) told the FE.

He also said falling trend of fuel prices and petroleum products in the global market also helped ease the overall import payment pressures recently.

Earlier on January 12 last, the central bank resumed purchasing the US dollar from the banks after around three months because of lower demand for the greenback in the market.

Lastly, the BB bought $8.5 million at Tk 77.40 on October 15, 2014, another BB official said.

“We’ve purchased the US currency from the banks aiming to protect the interests of exporters and migrant workers by keeping the exchange rate of the local currency against the greenback stable,” the central banker explained.

He also said the central bank may continue purchasing the US dollar in the near future on the basis of market requirement.

As part of the move, the BB bought $1.44 billion from the commercial banks so far in the current fiscal year (FY) 2014-15, the BB data showed.

The country’s foreign exchange reserve rose to $21.83 billion Thursday from $21.72 billion of the previous day following the US dollar purchase.

On the other hand, the depreciating trend of BDT against the US currency started in the middle of November last year and continued until last working day of calendar year 2014 due to higher import payments, according to the market operators.

Earlier on November 24 last, the BB resumed intervention in the foreign exchange market through selling of the US dollar to the commercial banks directly after nearly two and a half years to keep the market stable.

As part of the move, the central bank has so far sold $357 million to the commercial banks to meet the growing demand for the greenback.