BB backup to falling dollar balances taka-dollar exchange

Bangladesh taka (BDT) depreciated by nearly 50 paisa against the US dollar Monday as regulatory backup to the falling greenback balanced the exchange-rate reversal of the previous working day.

The reference rate in the US currency and BDT rose to Tk 121.1375 per dollar at 5:00pm on the day from Tk 120.6708 in the same period of the previous day, according to the central bank's latest statistics.

"The local currency depreciated around 50 paisa mainly due to the central bank's intervention in the market," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE) in explaining the latest market situation.

Market operators, however, urge the central bank to intervene in the foreign-exchange market in a timely manner to avert possible market volatility.

"The local currency may appreciate against the US dollar if the central bank fails to intervene in the market in a timely manner," a senior treasury official at a leading private commercial bank (PCB) told The Financial Express in response to a query.

He also warns that remittance inflows could shift to informal channels if the exchange rate of the US dollar depreciates against the BDT. "Export earnings may decrease on the same grounds."

However, Bangladesh Foreign Exchange Market Spot Reference Exchange Rate is a transaction-based weighted average rate that comprises forex spot transactions of $100,000 or above on the market.

The central bank calculates the daily reference rate considering weighted average rate on the US dollar and BDT of the four types of transactions of all 61 authorised dealer (AD) banks in Bangladesh.

The forex transactions include export-proceeds encashment and commercial remittance, deal details with exchange houses or aggregators for inward remittance, spot foreign-currency (FC) selling covering all deals inclusive of letters of credit (LC), service payments, debt service, outbound remittance and inter-bank forex transactions.

Earlier on Sunday, the central bank intervened in the market by purchasing US$171 million from 18 banks through an auction for the first time in Bangladesh.

At the auction, the central bank accepted bids at a maximum cut-off rate of Tk 121.50 per dollar, another BB official said, adding that interested banks are allowed to quote a single rate for such auctions.

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