The Bangladesh Bank purchased dollars worth $738 million in the first 58 days of the current fiscal year as it continues its effort to keep the value of taka stable against the greenback amid stagnant business situation in the country resulted from the ongoing political unrest, said BB officials.
The central bank started to intervene in the foreign currency market after the Bangladeshi currency had fallen to around Tk 84 a dollar in the first half of 2012 from around Tk 71 in the previous year, they said.
But, the value of dollar started to decline from late last year because of fall in import payment amid slowing businesses and lack of import and it came down below Tk 80 in December 2012.
After the BB bought around $4.53 billion in the 2012-2013 financial year ended in July the taka became slightly stable at around 77.75 a dollar for the last few months.
A BB official said that the country’s foreign exchange market had passed a volatile situation in the last few years, as the taka faced both appreciation and depreciation in the period.
The US dollar appreciated heavily against the local currency taka in 2012 as the country faced a foreign exchange shortage due to decreased inward remittance and higher import payments in the period, a BB official told New Age on Tuesday.
The BB official said that the taka had recently appreciated against the greenback as the country’s import payments plunged due to the recent spates of political violence.
The import of capital machinery and industrial raw materials decreased in the recently concluded fiscal year as the businesspeople adopted a ‘wait and see’ approach in investing their fund in the productive sector amid political uncertainty, he said.
Besides, the export earning and inward remittance also increased in the FY13 resulting that the commercial banks are now holding enough greenback, he said.
The BB, like the last fiscal year, started the current fiscal year with huge amount of greenback purchase.
The BB data showed that the central bank purchased dollars worth $20 million on August 27, $50 million on August 21, $42 million on August 20, $50 million on August 19, $26 million on August 7 and $35 million on August 5 of this fiscal year.
The BB had purchased dollars worth $512 million in July.
Former BB governor Salehuddin Ahmed told New Age that it was not a good practice on the part of the central bank as purchasing dollar continuously would push up the inflation.
The BB has taken the initiative to save the interest of the exporters, but it should consider the country’s overall macro-economic situation as well, he said.
The BB should encourage the entrepreneurs to go for fresh investment in the productive sector and import capital machinery and industrial raw materials, he said.
The former BB governor said, ‘The central bank should take programmes to increase credit flow to the private sector which will ultimately create demand for greenback. In the process, the BB will get rid of the situation.’
BB spokesperson and executive director M Mahfuzur Rahman told New Age that the taka would have appreciated more if the central bank did not intervene in the local foreign exchange market.
He said that the dollar might have depreciated below Tk 65 if the BB did not buy the greenback in the FY13 and the first 58 days of the FY14.
The country’s foreign exchange reserve increased significantly since the beginning of the FY13 due to the BB’s dollar purchase move.
The foreign exchange reserve stood at $16.28 billion on August 27, up from $15.31 billion as on June 30 of 2013.
Asked whether the BB has any plan to invest the greenback in the productive sector, the central bank’s spokesperson said that the regulator was now searching ways to invest the dollars in the investment sector.
‘A dull business situation usually emerges in every pre-election period in the country. So, the import of capital machinery and industrial raw materials declined in the FY13.’
He hoped that uncertainty in the business sector would wither away soon.
Another BB official said that continuous fall in the Indian rupee against the US dollar had put a negative impact on the Bangladeshi exports to India and other countries as the country’s exporters were losing competitiveness against the neighbouring country’s exporters.
The Indian rupee, the Asia’s worst-performing currency this year, slid to a fresh low of 64.13 against dollar on August 21 from 63.19 on August 22, 2013.
Asked whether the BB would take any initiative to protect the exporters against the depreciation of rupee, Mahfuzur said the exporters should try to increase their competitiveness.
-With New Age input
