The US dollar rate hit a record high against the Taka despite Bangladesh having record foreign exchange reserves.
The supply of dollars in the country increased due to the increase in remittance inflows as well as the decline in imports, experts said.
Bangladesh Bank bought a record amount of dollars from the market fearing the price fall due to the increased supply, they added.
However, this scenario has changed as the second wave of the corona pandemic continues to weaken, they mentioned.
Prices of greenback have risen to the highest level as demand for the dollar from banks has picked up as imports have started rising again.
The price hike could not be controlled even though it started selling dollars to banks to control prices.
The central bank has sold $305 million to the scheduled banks in the second month of the 2021-22 financial year to stabilize the forex market.
However, the local currency Taka has depreciated by 37 paisa to stand at Tk 85.20 on Sunday against the US dollar since 05 August in this year, the highest rate of US dollar against Taka in history, according to Bangladesh Bank (BB) data.
On the other hand, the US dollar appreciated by more than one Taka within a theonth to stand at almost Tk 87.80 on Sunday against local currency Taka in the curb market.
Many exchange houses said the dollar rate has recently increased rapidly as dollar demand has increased against supply in the market which resulted in the greenback’s rate rising.
Earlier, in February 2020, before the outbreak of coronavirus, the highest price of the dollar was Tk 84.95.
Md Serajul Islam, Bangladesh Bank executive director and spokesman, said, “Bangladesh Bank sold US dollar to meet the demand of the banks.
In addition, $ 50 million was waived through a dollar swap with Sri Lanka, he said adding that, even after this, the foreign exchange reserves hit a record high.
However, the foreign exchange reserve has hit a record high to stand at $48.04 billion in the last month.
Economists said it is a natural process to increase the sale of dollars by Bangladesh Bank as its demand has increased. It is an indication of the economic stability of the country, they said.
A senior BB official said the central bank sold the US dollar to commercial banks to reduce pressure on the dollar to settle import payment obligations.
The central bank has been providing good support to stabilise the foreign exchange market, he said, adding it will continue in the coming months.
He said the foreign exchange market has been enjoying stability for the last few months as a result of steady remittance inflow and increased export earnings.
Bank officials said the wheels of the economy are moving again with the second wave of the Corona.
Many banks have increased their buying of dollars out of the possibility that the dollar may rise in the future, they said, adding that their fear is that remittances will go down.
As a result, the supply of dollars will not be the same as before, they mentioned.
Moreover, the import-export trade will return to normal, they said, adding that the demand for dollars will also increase.
Banks are increasing the amount of dollars they hold to themselves in order to supply extra dollars, they said.
Moreover, the monetary policy of the current financial year also indicates the rise in the value of the dollar.
As a result, the price of this most used foreign currency started rising in the domestic market, and since the announcement of the monetary policy on July 29, the dollar has seen a steady rise.
Dr Atiur Rahman, former governor of Bangladesh Bank, told Bangladesh Post, “The central bank has provided good support to the forex market that includes providing an easy system giving remittance to remitters as well as selling or buying dollars directly from the market, which have helped to make the forex market stable.”
Bangladesh Bank's intervention is playing a vital role in protecting the interest of the exporters as well as the remitters amid the Covid pandemic, he added.
“This is the highest monthly remittance received in the country’s history that helped push foreign currency reserves up, which is helping the rating of the country across the World,” he mentioned.