Dollar depreciation a prudent move: BB

Bangladesh Bank (BB) has lauded the recent decision of Bangladesh Foreign Exchange Dealers’ Association (Bafeda) and the Association of Bankers, Bangladesh (ABB) to depreciate the dollar by Tk 0.50.

“In the last several months, we closely monitored the demands for imported products and their supply. Our observations reveal a surplus in the current account balance. Although our financial account is currently in deficit, it is anticipated to improve in the upcoming days, with debt payments gradually decreasing,” said BB Spokesperson Mezbaul Haque at a press conference at the central bank headquarters in Dhaka city on Thursday.

“As debt repayments reduce, our demand for dollars will ease. Most letters of credit are now settled at sight, maintaining control over the demand for dollars in imports,” he added.

He said remittances are on the rise, ensuring a healthy supply of foreign exchange.

Highlighting the positive position of all banks’ Net Open Position, Haque emphasised that there is an ample supply of dollars. Therefore, BAFEDA’s decision to depreciate the dollar by Tk 0.50 per dollar was deemed prudent, he added.

As per BAFEDA and ABB decisions, the price for purchasing dollars for export proceeds and remittance fell to Tk 110, down from Tk 110.50 and the price of selling dollars for import settlements was set at Tk 110.50 which was Tk 111 earlier.

This marks the first adjustment in the dollar price since August 2021 when the Bangladesh Bank was setting the price. Since September of the same year, BAFEDA and ABB have been jointly determining dollar prices to stabilize the exchange rate, making this recent move a significant step in managing the currency’s valuation.