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BB buys dollars to stabilise forex mkt

Published : 09 Nov 2020 08:39 PM | Updated : 10 Nov 2020 12:24 AM

The Bangladesh Bank has resumed purchasing the US dollar directly from commercial banks after almost three years to stabilize the country's foreign exchange (forex) market.

Besides, the central bank is providing cash in the market by buying dollars to prevent devaluation. 

In the first four months of the current fiscal year (July-October), it has bought $3.6 billion. 

At the same time, Bangladesh Bank has released Tk 30,000 crore in cash to stabilize the supply of local currency.

A BB senior official said the central bank has purchased the greenback from the banks aiming to protect the interests of exporters and migrant workers by keeping the exchange rate of the local currency against the US dollar stable.

Bangladesh Bank may continue purchasing the dollar from the banks in order to meet the market requirement, he added.

Earlier, the central bank bought $1.93 billion from the commercial banks directly in FY 2017 on the same ground, he mentioned.

However, the central bank did not sell any single dollar on the market in the two previous fiscal years.

The US dollar was quoted at Tk 84.95 in the inter-bank forex market on Monday unchanged from the level of the previous working day.

Dr. Atiur Rahman, former Bangladesh Bank governor, told Bangladesh Post, “Remittance is the backbone of the country’s economy.”

Besides, the central bank has taken several initiatives including providing an easy system giving remittance to remitters as well as buying dollars directly from the market for a stable forex market, which encouraged expatriates to send money through   legal channels including banks, he added.

Atiur said this is the highest monthly remittance received in the country’s history helping push foreign currency reserves up to $41 billion that is good news for the country.

Market analysts said exports and remittance increased and imports declined amid coronavirus pandemic.

As a result, demand for dollars decreased in the foreign exchange market, they added.

As per the BB report, the country’s import payments in July-September of FY21 stood at $1,173.60 crore while the country’s export earnings in same time stood at $969.70 crore.

As a result, the overall trade deficit at the time stood at $203.9 crore.

During the time, the export earnings increased by about 3 percent while the import expenditure decreased by 11.47 percent. 

On the other hand, despite the global coronavirus pandemic, Bangladesh’s remittance inflow shows a stronger growth to reach a new record of $8.83 billion in the first four months in the current fiscal, up 43.24 percent over the same period of the previous fiscal.

This figure was $6.16 billion in the same period of the fiscal year 2019-2020.