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BB injects $2.26b in market to keep taka stable

Staff Correspondent | Published: 00:00, Jun 03,2019

 
 

A file photo shows a man counting US dollar notes in Dhaka. Bangladesh Bank continues selling the US dollars in the country’s financial market to keep value of the taka stable amid high import payments.— New Age photo

Bangladesh Bank continues selling the US dollars in the country’s financial market to keep value of the taka stable amid high import payments.
Till May 20 of the current fiscal year, the central bank injected $2,265 million in the local market to cool down the demand for the greenbacks.
The injection of the US dollars in the country’s local market includes $141 million in the first 20 days in May.
In last fiscal year, BB had injected $2,311 million amid a significant increase in imports, especially the food items.
In FY17, the amount of the dollar injected in the local market by the central bank was only $175 million.
The interbank exchange rate of a US dollar increased to Tk 84.5 on Thursday last week from Tk 83.9 at the beginning of January this year.
In last 29 months, the taka was devalued by 7.37 per cent or Tk 5.8 and the interbank rate of a dollar was Tk 78.7 in January, 2017.
Some of the banks, however, were selling the dollars at around Tk 85 each.
BB officials said that the devaluation of the taka continued for almost two years amid widening trade deficit.
To check the devaluation of the taka, the central bank has been selling the dollars in the local market for saving people from any sort of inflation shock, they said.
Due to increased payments against imports, the country’s trade deficit increased to a record $18.25 billion in FY18 with the current account deficit hitting $9.78 billion.
In the first nine months (July-March) of the current fiscal year 2018-19, country’s trade deficit reached $11.93 billion while the amount was $13.14 billion in the same period last fiscal year.
The country’s trade deficit was $6.46 billion in FY16 and it was $9.47 billion in FY17.
There are chances of an increased inflation due to the country’s import dependency, top executives of banks said.
Currency devaluation of the country would benefit exporters if they can negotiate with their buyers effectively, they said.
On the other hand, the increased value of the US dollar has been working as an encouraging factor for the expatriates in remitting fund to the country, the officials said.
Bangladesh Bank governor Fazle Kabir, while unveiling the monetary policy for the July-June period of FY19 on January 30, said that the devaluation of the taka took place due mainly to the existing global economic situation.
The devaluation would encourage exports and the expatriates to send money to the country, Kabir said.
Bankers have been pressing the central bank to inject more dollars in the market to facilitate import payments.

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