Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has gradually reduced its intervention in the country’s foreign exchange market in the current fiscal year (2011-12), following improvement in foreign exchange supply situation, officials said.
“Lower import payment pressure, steady growth of inward remittance, and rising trend of export proceeds have contributed to improve supply of foreign exchange in the market,” a senior official of the Bangladesh Bank (BB) said while explaining the improvement in foreign exchange supply situation.
Only US$10 million was bought from a Shariah-based Islami bank so far the current fiscal year, as part of the market intervention, while the central bank pumped $776 million directly to the commercial banks to meet higher demand for the greenback in the fiscal, according to the statistics.
The central banker also said the BB has provided the foreign currency support through selling the US dollar to the commercial banks to settle payment of import bills on account of essential items including fuel oil, wheat, fertilizer and scrap vessel.
The BB will play its role proactively in line with the market demand, he said, adding that the central banker is monitoring the forex market closely to keep it stable.
Besides, the central bank has provided overdraft (OD) facilities to the commercial banks, particularly to the state-owned commercial banks (SCBs), for making payment of import bill for petroleum products.
“We’ve provided around $500 million as OD facilities to the SCBs in the current fiscal. Of the amount, some $60 million is still outstanding, which will be adjusted by the end of June,” the BB official said.
Market behaviour was almost stable in the fiscal 2011-12 because of lower trade-related activities, a senior treasury official of a foreign commercial bank said.
“We see lesser involvement of the central bank in the forex market in the outgoing fiscal, mainly due to lower financing for import,” he noted.
In the fiscal 2010-11, the central bank bought $316.50 million directly from the commercial banks, against $2.161 billion of the previous fiscal.
On the other hand, the BB sold $1.279 billion directly to the commercial banks in 2010-11, compared to only $61.50 million in the previous fiscal, the BB data showed.
BBN/SSR/AD-06June12-9:20 am (BST)