The price of US dollar has come down to Tk 96 in the open market or curb market just two days after crossing Tk 104.
On Tuesday, the price of the greenback surpassed Tk 100 to stand at Tk 104 while on Wednesday it came down to Tk 100.
Market analysts said some businessmen, who bought dollars from the curb market or open market at a price of more than Tk 100 in the hope of making huge profit, now face a big loss.
The dollar, which was abruptly running like a mad horse, is now walking in the opposite direction, they added.
One dollar- trader, speaking on condition of anonymity, said, “Price of the dollar will decrease further. Everyone who bought dollars was caught unawares in the craze. Everyone is now stumbling to sell. As a result, supply of dollar increases, and so, prices are falling.”
However, inter-bank forex market sold dollars at the same rate on Wednesday.
On Monday, the central bank devalued taka by 80 paisa against dollar, the highest depreciation of the local currency in a single day.
The inter-bank exchange rate then stood at Tk 87.5 per dollar, up from Tk 86.7 a day before.
On Thursday, the state-owned Sonali and Agrani Bank sold dollar at Tk 92.45 and Tk 92.50 while Janata Bank sold a dollar at Tk 93.90.
On the other hand, Private Eastern and Prime Bank sold at Tk 98.
As such, Sonali and Agrani Bank are selling cash dollars at a price of Tk 5.60 more than the interbank rate. Other banks are selling at Tk 5 to Tk 5.50 more. But this difference should not be more than one and a half Taka.
Habibur Rahman, chief economist at Bangladesh Bank, said that although the fall in the value of money had a positive effect on export earnings and remittances sent by expatriates, there was a risk of increase in prices of imported goods.
“In the current global context, there is no alternative but to devalue the taka against the dollar. Neighbouring countries, including India, are devaluing their currencies. If we don't do it now, we will fall behind the competition,” he mentioned.
“It's true that the price of imported goods will go up. But at the same time, due to the high value of the dollar, imports will be somewhat discouraged. On the other hand, remittances and export earnings will increase. As a result, the reserves will increase,” he added.
Market analysts said the demand for US dollars rose significantly in the inter-bank foreign exchange market as the country's import demand had picked up recently and the remittance inflow declined as well.
They said the central bank usually sells US dollars directly to commercial banks to meet higher demand for the greenback. It is a sign of the economic stability of the country, they added.
The central bank has no direct control over the open market. However, if the banks sell dollars at higher prices, Bangladesh Bank intervenes because the banks buy dollars from the central bank at the interbank rates.
As seen earlier, Bangladesh Bank would have set a limit to the difference between the dollar sold by the banks and the interbank rate, it used to be between one and two Taka.
However, in the last few months, the banks have been selling dollars at a much higher price than the interbank rate, without intervention by Bangladesh Bank. With every passing day, the banks are increasing the value of the dollar as they wish while the value of local currency is decreasing. In the situation, the cost of imports is increasing while commodity prices are rising. However, exporters and expatriates are reaping benefit.
Even selling dollars to the commercial banks could not control the price of dollar.
Bangladesh Bank sold a record dollar worth $5.50 billion directly to commercial banks from the foreign exchange reserves to stabilise the forex market during the last 10 and a half months, but it failed to control the market.
Due to the Corona pandemic, imports fell sharply during the last fiscal year 2020-21, but remittances and export earnings jumped.
That is why, the supply of dollars in the market has increased. The central bank bought a record dollar of $8 billion in the last fiscal year to keep the dollar afloat. In July of the current 2021-22 fiscal year, dollar worth 205 million were bought.
However, since August 20, the picture reversed. As the Corona situation began to normalize, imports began to increase.
Although export earnings increased, remittance inflow continued to decline. Besides, foreign exchange reserves also decreased.
Since August 2021, the demand for dollars in the market increased. Besides, the dollar also appreciated against the local currency. As part of its move, Bangladesh Bank started selling dollars from August to keep the market stable, which is still continuing.
According to the central bank, on August 5 last year, the dollar was sold at Tk 74.80 per dollar in the interbank market.
The dollar has been 'stable' in this same place for more than a year. Since then, the value of dollar continued to rise.
In the last 10 months, the value of dollar against Bangladesh currency has increased by more than 2 percent.