Bangladesh Bank selling dollars

The Bangladesh Bank is selling dollar to stabilise the market after being on a buying spree for the same reason.

It sold $115 million over the past three days before seeking to reassure that there was little chance of an abnormal rise in dollar prices given the greenback’s adequate supply in the market.

The central bank's Forex Reserves and Treasury Management Department General Manager Kazi Saidur Rahman said, “A quarter always tries to destabilise the market by spreading panic.”

He said these people were at it again following a slight rise in dollar prices but there was enough supply in the market.

Analysts say it is natural for the central bank to sell dollars when it is in high demand.

The central bank sold $45 million at Tk 77.73 per dollar on Monday, taking the total sale over the past three days to $115 million.

The dollar had been gaining against the taka for the past several days. Within a month, taka lost 0.50 percent of its value vis-a-vis the dollar.

Experts and bankers say the central bank is releasing dollars in the market to contain it price. They say increasing imports is pushing up the demand for dollars and, hence, its price as well.

The interbank currency market saw a record $180 million being transacted on Monday.

Exchange rate data available from the Bangladesh Bank show the exchange rate in the interbank market a month ago (Oct 30) was Tk 77.40 to a dollar. On Monday, the rate was Tk 77.73 to a dollar.

Over the past three years, the central bank had bought 10 billion dollars from the market to keep its price stable.

There was a surge in dollar supply because of export revenues, expatriate remittances and slack imports, which prompted the bank to buy them for the sake of price stability.

But in recent times, a spurt in imports has pushed up dollar demands, influencing its price.

Saidur Rahman said dollars were being sold by the central bank keeping the fact in mind.

He said on Monday: “The dollar price is now increasing. So we are increasing the dollar supply in the market.”

Growing imports had increased the demand for dollars, said BIDS Research Director Zaid Bakht who described the trend as an indication of political stability.

He said that the political calm was encouraging investors to import capital goods and raw materials to set up industries.

In the first four months (July to October) of the current fiscal year, Letters of Credit were opened to the tune of near 14 billion dollars for imports. This was 15 percent more than the figure in the corresponding period of the previous fiscal.

Economist Bakht, who was recently appointed Chairman of the state-run Agrani Bank, said if export earnings and remittances maintained a positive trend, dollar prices would not increase much.

Central bank official Saidur Rahman also cited $180 million being transacted in the interbank market in a day as an indication of sufficient dollar supply.

Remittances dropped after Eid in October but picked up in November, he said, and expected the trend to remain unchanged in the coming months.

"Remittances always fall in the September-October period and rise again from November onwards,” he said.

Remittances stood at $1.16 billion in November. It was $1.01 billion in October.