Bangladesh Bank buys $176mn to keep dollar market ‘steady’

The central bank has purchased $764 million in six auctions since July

Bangladesh Bank has purchased another $176 million from commercial banks in its latest effort to stabilise the foreign exchange market amid signs of excess supply.

Spokesperson Arief Hossain Khan told bdnews24.com that the central bank bought the dollars at Tk 121.5 each.

“Bangladesh Bank will continue to play a role in keeping the dollar market stable. When rates drop, we intervene through auctions to absorb the surplus and prevent volatility,” he said. “More purchases may follow if needed.”

Thursday’s auction marked the sixth such intervention by the central bank since July, bringing the total dollar purchase during this period to $764 million.

Pubali Bank Managing Director Mohammad Ali welcomed the central bank's action, calling it “a stabilising force” for the currency market.

“This is also having a positive impact on the broader economy,” he said, adding that while boosting reserves is a clear goal, future risks to the dollar’s position must be kept in mind.

A deputy managing director of a commercial bank, speaking on condition of anonymity, said the central bank had initially indicated plans to purchase $30 million in the auction, but ended up buying $176 million.

“This is part of a strategy to prevent further depreciation of the dollar. The excess dollars in the market were absorbed to support the rate,” he explained.

The central bank also intervened in the market earlier this week.

On Sunday, it bought $83 million at Tk 121.47 to Tk 121.5 per dollar.

On Aug 7, it picked up another $5 million, when the rate hovered between Tk 121.35 and Tk 121.5.

In three separate phases earlier, the central bank had already purchased around $500 million at varying rates.

Bankers say rising remittance inflows and stronger export earnings are helping ease pressure on the foreign exchange market.

They believe the central bank’s ongoing purchases are contributing to a gradual build-up in reserves.

A senior Bangladesh Bank official explained that the recent softness in the dollar rate is largely due to increased supply.

“Demand for dollars has gone down as the volume of import-related LCs has declined. At the same time, most of the previous LC dues have already been settled,” he said.

Since the government change on Aug 5, 2024, monthly remittance inflows have consistently crossed the $2 billion mark, with March setting a new record at $3.29 billion -- the highest single-month remittance in Bangladesh’s history.