Dollar continues to get dearer
The US dollar appreciated heavily against the taka over the last seven days despite the injection of $102 million into the market by the Bangladesh Bank during the period.
The inter-bank exchange rate of the dollar shot up to Tk 81.70 yesterday from Tk 81.20 seven days back and from Tk 78.63 a year ago, according to data from the central bank.
The BB has sold $239 million to banks in the first 26 days of November -- the biggest selling spree yet in 2017.
From July 1 to November 26, the central bank has sold a total of $553 million to banks. In contrast, it sold $175 million and purchased $1.93 billion during the course of fiscal 2016-17.
"The central bank has repeatedly intervened in the market by injecting greenback to halt the depreciating trend of the taka, but its initiative has become fruitless as the demand for the US dollar continues to rise," said a BB official yesterday.
The taka has been depreciating against the dollar since the middle of October mainly due to a mismatch between the demand and supply of the greenback.
Remittance and exports, the two major sources of foreign currency for Bangladesh, are in the slow lane, while imports have ballooned, putting pressure on the exchange rate, said Syed Mahbubur Rahman, managing director of Dhaka Bank.
Businesspeople have long been taking buyers' credit from foreign sources to import industrial raw materials and capital machinery, he said.
A significant amount of buyers' credit has matured recently meaning the local banks have to pay back the foreign currency loans, which has led to a mismatch between supply and demand of the dollar, Rahman said.
The upward trend of the dollar is bad news for importers, who have to pay Tk 10 lakh extra for a bill of $1 million if the dollar rate goes up by even Tk 1.
Bangladesh's import bills have significantly increased in the first three months of the fiscal year and the existing trend indicates that the payments will rise further in the months to come. In the first three months of the fiscal year, imports soared 28.38 percent year-on-year to $12.19 billion.
The import of food grains, capital machinery and industrial raw materials continues to rise, the BB official added.
"The current account balance posted a huge deficit in the first quarter of the fiscal year. This reflects the existing foreign currency shortage," said Rahman.
Between the months of July and September, the current account deficit stood at $1.79 billion, in contrast to $539 million in the surplus a year earlier, according to data from the central bank. During the period, the trade deficit widened to $3.65 billion from $1.56 billion a year earlier.