The central bank of Bangladesh again lent its foreign exchange support last week through selling US dollars to banks aiming to keep the market stable, officials said.
The Bangladesh Bank (BB) sold $45 million to different commercial banks in the week to meet the growing demand for the greenback in the foreign exchange (forex) market.
Earlier on September 27 last, a total of $30 million was sold to banks, particularly public ones, on the same grounds.
During the last week the exchange rate of the local currency depreciated by five paishas against the US dollar in the inter-bank foreign exchange market, mainly due to the higher demand for the US currency, according to marker operators.
The US dollar was quoted at Tk 83.80 in the inter-bank foreign exchange market on Wednesday against Tk 83.78 the previous working day.
The rate hovered at Tk 83.75 on Sunday.
On the other hand, at the customer level the exchange rate of Bangladesh Taka (BDT) depreciated by 10 paishas against the US currency last week as the pressure built because of import settlement obligations, they added.
The exchange rate of the greenback for bills of collection (BC) rose to Tk 83.85 on Wednesday from Tk 83.80 the previous day.
The rate was Tk 83.75 on Sunday.
"The ongoing depreciating mode of BDT against the US dollar may continue until November," a senior treasury official at a leading private commercial bank (PCB) told the FE.
Import settlement obligations, particularly for fuel oil and capital machinery, increased recently and it might continue into the next month, according to the market insiders.
They said the country's forex market was almost stable in the last three months despite higher import payment pressure on the economy.
Lower inflow of remittance in September pushed up the demand for the US currency in the market, according to them.
The remittances from Bangladeshi nationals working abroad were estimated at $1.13 billion in September, down by $283.69 million from the level of the previous month. In August last, the remittances stood at $1.14 billion. The figure was $856.87 million in September 2017.
"The inflow of remittance normally falls after the Eid-ul-Azha," a BB senior official told the FE while explaining the downward trend.
He also expected that the inflow of remittance might increase in the current month.
On the other hand, the upward trend of petroleum products' prices in the global market put extra pressure on the country's foreign exchange market, the market insiders said.
Most of the banks were not interested in selling their US dollar funds in the inter-bank forex market, they said.
The banks were selling their greenback using other market mechanisms at higher rates, they disclosed.
They, however, said imports would be costlier in the near future following such a depreciating mode of the BDT against the US dollar while remitters and exporters would gain slightly.
Talking to the FE, an executive director of the BB said the central bank might continue providing such foreign currency support to the banks as per market requirements.
A total of $200 million has been sold to the commercial banks since July 01 of the current fiscal year as part of its ongoing support, according to the BB official.
The central bank had provided its foreign currency support to the tune of $2.31 billion to the banks to settle import payments in the FY 18. It was $175 million in FY 17.
"We're monitoring the overall forex market closely to avoid any unwanted situation," the central banker explained.
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