BB sells dollars to five banks as demand picks up
After a gap of two and a half years, Bangladesh Bank yesterday sold greenbacks of $45 million to five banks, as demand for the foreign currency has gone up for a pick-up in imports.
BB last sold greenbacks, of around $10 million, to a single bank on June 20, 2012, after which it has been purchasing the currency -- $11 billion so far -- in an effort to keep the exchange rate stable.
The economy has started to pick up over the last one year, due to which there has been an increase in import demand, said Kazi Saidur Rahman, a general manager of the central bank.
“In the present context, it is a positive sign,” he said, adding that it means the demand for capital machinery and intermediary goods is on the rise.
In the first quarter of the fiscal year, imports rose 13.62 percent, while that of capital machinery soared 22 percent and petroleum 52 percent, according to central bank statistics.
Exports, on the other hand, have been flat, said Zahid Hussain, lead economist of the World Bank's Dhaka office. In the July-September period, export growth stood at 0.97 percent, according to data from BB.
Remittance did well in the first quarter but not so well in October, he said. As a result, the current account balance turned into deficit.
“These may have caused a shift in market expectation about the behaviour of the exchange rate in the near future.”
The dealers may be expecting the exchange rate to depreciate and may thus be holding back their stock of dollars turning their expectations into a self-fulfilling prophecy, he said.
The taka has depreciated marginally in recent days. Under such circumstances, the sale of dollars may have been intended to smooth exchange rate volatility.
However, some depreciation of the taka brought about by natural market forces may be helpful in reviving export and remittance growth while the fundamental drags on these are fixed, Hussain said, adding that the latter is critical because currency depreciation alone cannot restore export and remittance growth.
Meanwhile, Zaid Bakht, research director of the Bangladesh Institute of Development Studies, tipped the imports to increase further once the Padma Bridge construction work takes off in full swing.
He blamed the slow pace of exports to order cancellations after the Rana Plaza disaster.
However, in recent times the garment factories are seeing new orders, which will help increase exports, he added.
In the July-September period, the current account saw a deficit of $357 million.
In the inter-bank forex market, the dollar traded at Tk 77.63 yesterday, which was Tk 77.4 on October 30.
The foreign currency reserve stood at $21.61 billion on Sunday.
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