BB resumes dollar sale to banks

FT ONLINE

The central bank has restarted providing foreign exchange (forex) support to banks through selling the US dollars to them in October after one month's interval to keep the market stable, officials said.

As part of the move, the Bangladesh Bank (BB) has sold US$40 million to different commercial banks so far this month to meet the growing demand for the greenback in the forex market.

Of the amount, $10 million was sold on last Wednesday and Thursday (October 16 and 17), and the remaining $30 million was sold on October 07, according to the latest official figures.

"We've sold $10 million in two days of this week to a state-owned commercial bank (SoCB) at market rate to help it settle import payment obligations, particularly for fuel oils and capital machinery for power plants," a senior official of the BB said recently.

The US dollar was quoted at Tk 84.70 each on Thursday in the inter-bank forex market, unchanged from the previous level, according to the market operators.

The central bank may continue providing such foreign currency support to the banks in line with the market requirement, the official hinted.

A total of $99 million has been sold to the commercial banks so far in the current fiscal year (FY), 2019-20, as part of the central bank's ongoing support initiative.

In FY 19, the BB sold $2.34 billion to the banks on the same ground, according to official data.

The market operators, meanwhile, said the demand for the US dollar is gradually increasing, mainly due to higher import payment pressure, particularly for intermediate goods, fuel oils and capital machinery.

A senior treasury official of a leading private commercial bank said the Bangladesh Taka (BDT) has been maintaining a depreciating trend against the US currency in recent months mainly due to higher demand for the greenback in the market.

"The demand for the greenback may increase in the near future if the central bank does not provide adequate foreign currency support to the banks for settling their import payment bills," he predicted.

Meanwhile, the local currency depreciated by 80 poisha against the greenback in the inter-bank forex market from January 02 to October 07 of this calendar year.

The greenback was quoted at Tk 84.70 each in the inter-bank market on October 07 against Tk 83.90 on January 02. On October 03, the local currency lost its value by 15 poisha against the US currency.