Dhaka, Bangladesh (BBN) - The central bank intervened in the foreign exchange (forex) market by purchasing US$171 million from banks through an auction for the first time in Bangladesh on Sunday.
The Bangladesh Bank (BB)’s latest move came against the backdrop of falling trend of the exchange rate of the US currency against the Bangladesh Taka (BDT) more than a week following higher inflow of remittances along with export earnings.
Actually, the US dollar depreciated by around BDT 3.0 against the local currency mainly due to lower demand for the American greenback following higher inflow of remittances and export earnings, according to market operators.
Lower demand for imports as well as the ongoing tariff negotiations with the United States has also pushed down the exchange rate of the US dollar in the local market, they explained.
However, a single-price exchange rate of the US greenback against the BDT was fixed at BDT 121.50 per US dollar at the Sunday’s auction, according to BB officials.
The single-price exchange rate of the greenback against the BDT was fixed considering the real effective exchange rate and the ongoing inflationary pressure on the economy, they added.
“We’ve intervened in the market by purchasing US dollars from commercial banks through an auction, aiming to keep the exchange rate of the BDT against the greenback stable,” a senior BB official said while explaining the main objective of the intervention.
He also said the central bank will sell the US dollar to banks through a similar auction if the exchange rate of the greenback increases against the local currency.
The exchange rate of the US currency is expected to rise to BDT 121.50 per unit of the greenback on Monday, up from BDT 120 a day ago, according to a senior treasury official at a leading private commercial bank (PCB).
Most of the banks quoted the exchange rate of the US currency at BDT 120 per unit of the US dollar on Sunday. It was more than BDT 123 more than a week before.
BBN/SSR/AD