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Taka gains against dollar despite corona

Published : 23 Feb 2021 09:36 PM | Updated : 26 Feb 2021 03:04 PM

The local currency Taka has appreciated by 15 paisa to stand at Tk 84.80 against the US dollar since July 1 in the current fiscal despite the  coronavirus pandemic.

 The foreign exchange market,on the other hand, has enjoyed a stable situation in the last one and half months.

The US dollar was quoted at Tk 84.80 on Tuesday, the same since 12 January, 2021, according to the Bangladesh Bank( BB) data.

Experts said the central bank has played a crucial role in providing cash in the market by buying dollars to prevent further devaluation. 

The Bangladesh Bank (BB) resumed purchasing dollars and bought $5.88 billion directly from the commercial banks during July-January in the current fiscal year to keep the foreign exchange market stable, according to BB data.

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

Market analysts said the BB has broken all previous records of dollar purchase in just seven months in the wake of higher flow of remittance, good export earnings and lower imports caused by the economic slowdown amid Covid-19 pandemic.

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

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 dollars from the banks in order to meet the market requirement, he added.

Dr Atiur Rahman, former governor of Bangladesh Bank, told Bangladesh Post, Bangladesh Bank has taken several initiatives that include buying dollars directly from the market for a stable forex market.

“The country’s foreign currency reserves crossed $43 billion to stand almost at $43.51 billion for the purchasing of dollars by the central bank. That is good news for the country,” he added.

Dr Zahid Hossain, former lead economist of the World Bank, said the US dollar depreciated in Bangladesh against Taka as the dollar had depreciated in the international market during the pandemic. 

Due to the initiative of the central bank, the value of the dollar has not decreased much, he said adding that if Bangladesh Bank did not buy dollars, the value of Taka against the dollar would increase even further. 

“However, the rupee appreciated sharply against the dollar as imports to India declined and GDP growth slowed. The central bank of India has also not intervened in the foreign exchange market, he mentioned.

As part of its move, the value of the dollar in Bangladesh was almost stable, but the value of  dollar in India was unstable, Hossain said further.

However, the US dollar also devalued at the curb market. The local currency appreciated by Tk 1- Tk 1.30 to stand at Tk 86.35 on Tuesday.

Saiful Islam, an owner of a money changer house, told Bangladesh Post, “The dollar rate devalued in the last several months amid the corona virus pandemic.

He said people do not buy much foreign currencies due to restrictions of travel to different countries due to the pandemic.

Bankers said higher remittance inflow helped increase supply of greenback in the foreign exchange market.

Remittance may continue its upward trend in the upcoming months as the restriction on movement globally has largely broken the global hundi cartel, they added.

Some economists attributed the growth in remittance inflow also to a government provision of 2 percent cash incentive to remitters on inward remittance for the last fiscal year.

Remittance hit an all-time high to cross to $20 billion for the first time to stand at $21.74 billion in the last year, up 18.59 percent higher over that in the same period of the previous year.

This inflow stood at $ 14.91 billion during July-January period in the current fiscal year.

On the other hand, the export earning stood at $22.67 billion in July-January 2020.

The US dollar was quoted at Tk 84.80 in the inter-bank forex market on Tuesday unchanged from the level of the previous working day.