Regulator intervenes to rescue sinking dollar
BB buys $171m from banks in maiden such auction to stabilise exchange rate
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In a maiden such intervention in the foreign-exchange market, the central bank Sunday bought US$171 million from banks through an auction to buttress falling dollar.
The Bangladesh Bank's latest move came in the wake of a falling trend in the exchange rate of the US currency against the Bangladesh taka (BDT) more than a week following higher inflow of remittances along with export earnings.
Lower demand for imports as well as the ongoing tariff negotiations with the United States also pushed down the exchange rate of the greenback on the local market, according to market operators.
Actually, the US dollar depreciated by around Tk 3.0 against the local currency mainly due to lower demand for the dollar following higher inflow of remittances and export earnings, they added.
However, a single-price exchange rate of the greenback against the BDT was fixed at Tk 121.50 at Sunday's auction, officials said.
The single-price exchange rate was fixed considering real effect exchange rate as well as inflationary pressure on the economy, they added, without elaborating on the mechanism.
"We've intervened in the market by purchasing US dollars from commercial banks through an auction aiming to keep the exchange rate of the BDT against the greenback stable," a senior official of the Bangladesh Bank (BB) told The Financial Express while explaining the main objective of the move.
He also said the central bank will sell the US dollar to banks through similarly auction if the exchange rate of the greenback increases against the local currency.
"We may consider intervening in the market whenever necessary for ensuring the exchange rate of the US dollar against the local currency remaining stable," the central banker explains.
The exchange rate of the US currency is expected to rise to Tk 121.50 per unit today (Monday), up from Tk 120 on Sunday, according to a senior treasury official at a leading private commercial bank (PCB).
On Sunday, most banks quoted the exchange rate of the US currency at around Tk 120 per unit. It was more than Tk 123 more than a week before.
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