Dhaka, Bangladesh (BBN) - The central bank has intensified its intervention in the foreign exchange market, increasing direct purchases of US dollars from commercial banks to stabilise the Taka amid a surge in remittance inflows ahead of Eid-ul-Fitr.
Officials said the move aims to absorb excess foreign currency liquidity, prevent undue volatility in the exchange rate, and gradually strengthen the country’s reserve position.
As part of the ongoing mop-up drive, Bangladesh Bank purchased an additional US$105 million from seven banks through an interbank spot market auction on Thursday. The amount was bought under the Multiple Price Auction method, with a cut-off rate of BDT 122.30 per dollar, according to central bank officials.
The latest intervention came amid stronger inward remittance inflows during the first 18 days of the current month ahead of the Eid-ul-Fitr festival.
Remittance inflows rose by 27.53 per cent to $2.13 billion during February 1–18 this year, compared with $1.67 billion in the same period last year.
Earlier, on February 18, the central bank had purchased another $109 million from eight banks through a similar interbank spot market auction.
According to the central bank’s latest data, Bangladesh Bank has bought $5.26 billion directly from banks since July 13 under the prevailing free-floating exchange rate regime.
“We’re mopping up the surplus inflow of foreign currency by increasing our purchases of US dollars from banks,” a senior BB official said while explaining the latest market situation.
The official added that higher remittance inflows ahead of Eid, coupled with lower import payment obligations, have recently widened the foreign exchange surplus.
He further noted that such intervention helps maintain stability in the exchange rate of the US dollar against the Taka, thereby encouraging exporters and remitters.
“The ongoing intervention is also contributing to a gradual strengthening of the country’s foreign exchange reserves,” he said.
Meanwhile, Bangladesh’s gross foreign exchange reserves rose to $34.78 billion on February 19 this year from $34.54 billion on February 17, according to the central bank’s traditional calculation method.
Under the International Monetary Fund’s Balance of Payments and International Investment Position Manual, sixth edition (BPM6), the reserves stood at $30.06 billion during the period under review, up from $29.86 billion.
BBN/SSR/AD