The Bangladesh Bank has accelerated its purchasing of US dollars from the scheduled banks to keep the inter-bank foreign exchange market stable ahead of Eid-ul-Azha.
According to the latest central bank data, the BB bought dollar worth $328 million in the first 10 days of this month from the banks to offset higher supply of foreign exchange in the market before Eid.
Besides, transaction at the call money market increased significantly in the last few days as the banks and non-bank financial institutions, which are facing liquidity shortage, have been borrowing from the short-term market to meet the clients’ demand ahead of Eid.
The call money rate — the interest rate at which a bank or an NBFI provides short-term loans to other banks and NBFIs — also went up to 9-10 per cent on Sunday from 8-9 per cent on Thursday.
The central bank purchased greenback worth $1,395 million between July 1 and October 10 of this fiscal year.
Higher inflow of remittances contributed to the increase in the supply of foreign exchange in the local market ahead of the Eid festival, a BB official told New Age on Sunday.
The central bank continued to intervene into the foreign exchange market to protect the interests of exporters and migrant workers by keeping low the exchange rate of the local currency taka against the US dollar, he said.
The country’s foreign exchange reserve stood at $16.70 billion on Sunday after the dollar purchase.
The BB’s intervention in the foreign exchange market will continue in line with the market demand, the official said.
The BB data showed that the central bank purchased dollars worth $94 million on October 10, $90 million on October 8, $81 million on October 7 and $63 million on October 2 of this fiscal year. The BB bought the dollars from the banks at Tk 77.75 a dollar.
The central bank started to intervene into 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, another BB official said.
But, the value of dollar started to decline from late last year because of fall in import payment amid slowing business and lack of import and it came down below Tk 80 in December 2012, the official said.
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, he said.
The country’s foreign exchange market has been passing a volatile situation for the last few years, as the taka faced both appreciation and depreciation in the period, he said.
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, he said.
The taka has recently appreciated against the greenback as the country’s import payments plunged due to the recent spates of political violence, he said.
The export earning and inward remittance also increased in the FY13 resulting that the commercial banks are now holding enough greenback, he said.
Besides, transaction at the call money market in the last few days increased as the majority of the scheduled banks witnessed a rush for money transaction few days ahead of Eid-ul-Azha, he said.
The banks and NBFIs made a huge transaction on the call money market on October 10 by borrowing collectively Tk 8,846.50 crore from the market on the day.
The banks and the NBFIs usually borrow Tk 6,000 to Tk 6,500 crore from the call money market in a working day, but they borrowed Tk 8,500 crore to Tk 8,800 crore daily in the last few days.
-With New Age input
