The Bangladesh Bank injected around Tk 2,548 crore into the country’s banking sector in the last seven days, which in turn would help bring some ease to the ongoing liquidity crisis in the sector.
In the wake of the coronavirus outbreak across the globe, the central bank has purchased $300 million from the scheduled banks since March 10, said BB officials on Monday.
An increased inflow of remittance and a fall in import payments have prompted the BB to purchase the US dollars from the market to keep the dollar price stable on the local market, they said.
Former Association of Bankers, Bangladesh chairman Anis A Khan told New Age that the release of the money would be supportive of the banks.
Anis, however, said that the amount was not that significant yet.
The injection of fund in the money market by the central bank would also help the banks tackle the immediate impact of the 9-per cent lending rate implementation from April 1, he said.
The deposit flow might face a slowdown as an immediate impact but would improve gradually, he said.
‘I do not think that the central bank would continue purchasing dollars for long,’ Anis said.
Mutual Trust Bank managing director and chief executive officer Syed Mahbubur Rahman told New Age that the fall in import against the surge in remittance earnings was the reason for the surplus US dollars in the banks.
The BB’s move would improve liquidity situation in the banking sector, said Mahbub, adding, ‘The businesses are reluctant to take credit from the banks amid the coronavirus outbreak.’
The flow of money, however, is helping the banks keep deposit rates low ahead of the 9-per cent lending rate implementation, said Mahbub, also a former ABB chairman.
An official of the central bank said that the impact of the money released by it to the market would be five times.
The BB may continue to do so until the dollar supply becomes normal, he said, adding that the monetary policy of the central bank permitted it to release around Tk 12,000 crore to the market.
To attain 14.8 per cent private sector credit growth in the fiscal year 2019-2020, the government in the revised monetary policy has targeted to attain 13 per cent broad money supply.
However, the actual growth was 9.2 per cent in January this year, much lower than the BB’s projection, mainly due to the heavy borrowing by the government that lowered the banks’ capacity to lend the businesses.
The government’s borrowing from the banking sector stood at Tk 53,055.28 crore on March 3, exceeding its annual projection to borrow Tk 47,364 crore from the banking system.
Before March 10, the central bank for the last time purchased the dollars from the local market on January 4, 2017 and since then it had been injecting the US dollars into the local market.
The stability of the dollar on the local market would also save the remitters and the exporters from a potential price fall.
The interbank exchange rate of the dollar was Tk 84.95 on Monday.
In FY20, the BB sold $489 million to the local market till Sunday after selling $2.34 billion in FY19.
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