Bangladesh central bank buys another $123mn to steady exchange rate

It has bought $1.448 billion in February alone

Bangladesh Bank has purchased a further $123 million from the market as part of its efforts to stabilise the exchange rate.

With the latest intervention, the central bank’s total dollar purchases in the current fiscal year have reached $5.385 billion.

The country's financial market regulator said on Sunday it bought $1.448 billion in February alone.

The most recent purchase was made from eight banks at a rate of Tk 122.50 per US dollar, a move that has contributed to a strengthening of the taka against the dollar.

While the Indian rupee has continued to weaken against the US dollar, Bangladesh Bank has been buying dollars regularly from commercial banks to prevent a sharp depreciation of the taka.

Speaking earlier this month, during the announcement of the monetary policy, Governor Ahsan H Mansur said without such dollar purchases the taka would have weakened further, driving up import costs and raising the risk of higher prices for essential goods.

He warned that such pressures would undermine Bangladesh Bank’s inflation-control strategy.

At the same time, the dollar purchases are helping to rebuild foreign exchange reserves.

According to the latest data, Bangladesh Bank’s reserves stood at $30 billion under the BPM-6 accounting method and $34.77 billion in gross terms at the close of business last Thursday.

By contrast, the Reserve Bank of India (RBI) data show that the Indian rupee has lost between 1.2 percent and 1.7 percent of its value against the dollar over the past three months.

In November, the exchange rate stood at 89.15 rupees per dollar. By Sunday, it had weakened to 90.75.

The rupee recorded its sharpest fall in January, when the United States imposed an additional 50 percent tariff on Indian goods.

At the time, Indian media described the drop as a historic low, with the currency sliding to as much as 91.50 rupees per dollar.

The rupee has since recovered some ground after the United States agreed earlier this month to cut the tariff to 18 percent, following India’s decision to halt imports from Russia.