Bangladesh Bank sold $2.31bn in fiscal 2017-18

In the just-concluded fiscal year, Bangladesh Bank sold $2.31 billion to keep the currency market stable.

The figure is the highest in five years.

On Wednesday, the inter-bank exchange rate of the dollar stood at Tk 83.7 after an increment of 4 percent occurred from Tk 80.59 which was the rate a year earlier.

The foreign currency market has remained unstable since the beginning of the last fiscal year.

According to a BB report released last year, the consistent depreciation of the taka against the dollar is quite unusual.

The banks charged Tk 2 more for selling one dollar from businesses than the rate declared for the settlement of letters of credit, the report found.

As a result, the import cost increased and the foreign currency market became unstable despite the rise in inward remittances and export earnings.

Zaid Bakht, research director of Bangladesh Institute of Development Studies or BIDS, said equipment imports necessary to implement infrastructure projects and the last year’s higher rice import put pressure on the dollar price.

According to the BB, the overall import payment for goods increased by 25.18 percent in the first 10 months of fiscal 2017-18, of which capital equipment import accounted for 31 percent of the increment.

The central bank made a routine payment of $1.57 billion to the Asian Clearing Union (ACU) against imports during the January-February period of 2018. The import bill for Bangladesh has never been higher than this amount before.

For the May-June period, it will have to pay around $1.27 billion this week, said a BB official.

At present, the BB has more than $33 billion in forex reserves. After the ACU payment, the reserves will decline marginally.

Bangladesh has abandoned the fixed exchange rate regime in 2003 and now practises a floating exchange rate system. This means the foreign exchange rate will be determined by the market.

To keep the market stable, the BB interferes in the forex market sometimes by purchasing and selling the greenback.

In fiscal 2014, the BB purchased $5.15 billion, but did not sell any dollar. The following year, it sold more than $3.76 billion against the purchase of $375 million.

In fiscal 2016, the central bank did not sell the dollar. Rather, it bought $4.14 billion.

In the fiscal year of 2017, the BB sold $175 million in dollars against the purchase of $1.94 billion. (bdnews24.com)