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Bangladesh Bank’s foreign currency reserves have edged up after the central bank bought nearly half a billion dollars from commercial banks through two auctions this week, the first of their kind in the country.
On Wednesday, Arief Hossain Khan, the central bank spokesperson, said the country’s foreign exchange reserves rose to $24.99 billion (BPM6), while gross reserve now stands at $30.03 billion.
Just over a week ago, on Jul 7, the BPM6-compliant reserves were at $24.45 billion, while gross reserves stood at $29.52 billion, reports bdnews24.com.
“This reserve growth comes from the dollars we purchased in auctions. The auctions also help keep the exchange rate stable,” Arief said.
Bangladesh Bank bought dollars via auction for the first time on Sunday, purchasing $171 million. On Tuesday, it bought another $313 million.
With these two auctions, the central bank acquired a total of $484 million. The second day’s purchase was added to the reserve on Wednesday.
The central bank maintains three types of reserve statistics: gross reserve, BPM6-compliant reserve, as required by the International Monetary Fund (IMF), and usable reserve.
To meet IMF loan conditions, the central bank had earlier moved to a market-based exchange rate on May 14, but this shift did not initially cause the dollar price to rise.
Following a period of rate stagnation, the dollar began to show a slight decline about 10 days ago, bankers said.
They attributed this to an increase in remittance inflows and export earnings, which helped maintain a stable dollar supply.
At the same time, reduced imports of capital machinery meant less demand for foreign currency.
To prevent the dollar’s depreciation, Bangladesh Bank began buying dollars from the market for the first time via auction.
In these auctions, the central bank was seen paying more than what commercial banks had anticipated, signalling its intent to support the rate.
According to central bank data, banks sold dollars at Tk 121.20 on Wednesday, compared to Tk 121.50 on Tuesday, Tk 120.10 on Monday, and Tk 121.20 on Sunday.
A senior official at Bangladesh Bank said the auction method would not be used daily but as needed.
“We won’t buy dollars every day. We will intervene via auction only when we deem it necessary based on market conditions,” he said.