The Bangladesh Bank has sold $122 million from its foreign exchange reserves to commercial banks as rising demand for the US currency pushed the dollar’s exchange rate higher in the domestic market.
The central bank sold the dollars today (28 October) at rates ranging from Tk124 to Tk124.30 per dollar, against demand from commercial banks for $800 million. The gap between demand and supply highlights the continuing pressure on the foreign exchange market.
The central bank last sold dollars from its reserves on 20 October, at Tk123.65 per dollar. However, according to a senior commercial bank official, the $20 million dollar sales had failed to bring down the exchange rate significantly.
Yesterday morning, remittance houses offered dollars to commercial banks at rates ranging from Tk124.30 to Tk124.50. Some banks bought the currency at Tk124.30. The offers came down after Bangladesh Bank supplied dollars to commercial banks.
The market faced additional pressure as payments totalling more than $300 million were due on the day. Bankers also said the pressure had increased because remittance inflows tend to be relatively low towards the end of the month.
Another senior commercial bank official said demand for dollars remained strong in the banking sector and that further sales from the reserves could help stabilise the market.
“Since several more payments are due this month, the market will remain stable if the central bank sells dollars from its reserves a few more times,” the official said.
Meanwhile, on Tuesday, the Bangladesh Bank had issued a notice to commercial banks regarding dollar sales but did not sell any dollars from its reserves that day.
So far in the current fiscal year, the central bank has sold a total of $153.50 million from its reserves. According to Bangladesh Bank data, expatriate Bangladeshis sent home $2.54 billion in remittances during the first 27 days of this month.
Another senior commercial bank official said dollar demand had increased over the past few days, largely because of substantial payment requirements from Petrobangla and the Bangladesh Petroleum Corporation (BPC).
Bangladesh Bank data show that commercial banks opened letters of credit (LCs) worth more than $8 billion in September, up from $6.65 billion in August.
About The Author
