Dollar hits Tk 109 in inter-bank trade

Banks have traded dollar at as high as Tk 109 among themselves, reflecting persistent shortage of foreign currency in the market.

The central bank data showed that banks sold the greenback at rates as low as Tk 108.03 to a maximum of Tk 109 on June 14.

This was the highest rate for the US dollar, which has been appreciating against the Bangladesh's taka in the face of falling foreign currency reserves, as the requirement for external payment, including import bills, continues to overshoot inflows.

Foreign exchange reserves stood at $29.83 billion as of June 14, down from $29.87 billion two weeks ago.

Bangladesh's foreign exchange reserves were $41.82 billion at the end of June last year, according to data by the central bank.

Since then, reserves gradually fell as payment requirement for imports--though dropped 14 per cent plus in July-April period of the current fiscal year--remained higher than the total inflow, particularly exports and remittances.

Export and remittance earnings growths are slowing down.

"The price of dollar will continue to go up so long the demand and supply gap remain in the market," said a head of treasury division of a private bank.

To reduce the crisis, the BB sold more than $320 million to support banks to meet international payment obligations, said a senior official preferring anonymity as he is not authorised to talk with the media.

The official, however, said the inter-bank exchange rate of dollar declined to Tk 108.80 yesterday.

The increasing cost of the greenback is pushing import cost and prices of import-based commodities.

But a chief executive said the depreciation of the taka is needed to encourage migrant workers and non-resident Bangladeshis to send their earnings through the banking channel.

This will improve foreign reserves and facilitate banks to clear payments in various areas such as transfer of profits by multinational companies to their shareholders abroad and payment to foreign airlines, he said.

"We are failing to clear payments timely and delaying for shortage of dollars," he said, adding that dollar scarcity is a major reason behind the recent downgrade of Bangladesh's long-term rating to B1 from Ba3 by Moody's Investors Service.

"The dollar rate should be near to the market reality as we will get more remittance for this. This will allow us to regularise payments too," said the CEO.