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Dhaka, Bangladesh (BBN) - The Bangladesh Taka (BDT) appreciated by two poisha against the US dollar on Wednesday after nearly three years in the inter-bank foreign exchange (forex) market.
The US dollar was quoted at BDT 84.88 per unit on the day against BDT 84.90 of the previous working day, according to the market operators.
“The exchange of local currency against the US dollar has been fixed in line with the market requirement,” a senior official of the Bangladesh Bank (BB) told the BBN in Dhaka.
He also said the demand for the US currency decreased slightly following higher inflow of remittances and lower import payment obligations recently.
Bangladesh received more than $1.0 billion remittances in the first 17 days of this month, according to another BB official.
He also expected that the inflow of remittances will cross $1.7 billion by the end of this month.
The inflow of remittances witnessed an upward trend in the recent months as the government started providing incentive to the beneficiaries against inward remittance.
The flow of inward remittances rose by 22.57 per cent to $7.71 billion during the July-November of the current fiscal year (FY), 2019-20, from $6.29 billion in the same period of the previous fiscal, the BB data showed.
On the other hand, import expenses maintained a falling trend in the recent months mainly due to lower imports of food grains and capital machinery, according to the BB officials.
“Currently, petroleum products including LNG and intermediates goods are now dominating the country’s overall imports,” the central banker noted.
Bangladesh’s overall import dropped by more than 3.0 per cent to $18.14 billion in the July-October period of this fiscal from $18.73 billion in the same period of FY ’19.
The latest appreciation of BDT came just after 21 days of depreciation of the same in the inter-bank forex market.
Earlier on November 27, the exchange rate of local currency depreciated by 10 poisha in the inter-bank market mainly due to higher demand for the greenback.
The US dollar was quoted at BDT 84.90 each in the market on the day against BDT 84.80 of the previous working day.
The local currency had maintained a depreciating mode against the US currency in the recent month following lower export earnings.
Bangladesh’s overall export earnings decreased by 7.59 per cent or US$1.30 billion in the first five months of the current fiscal year (FY) following economic slowdown in Europe and trade tension between the US and China.
The aggregate export earnings came down to $15.78 billion during the July-November period of FY ’20 from $17.07 billion in the same period of FY ’19, according to the official figures.
Meanwhile, the local currency depreciated by BDT 1.0 against the greenback in the inter-bank forex market from January 02 to November 27.
The greenback was quoted at BDT 84.90 each in the inter-bank market on November 27 against BDT 83.90 on January 02 this calendar year.
Earlier on December 27, 2016, the local currency appreciated by 10 poisha against the US dollar in the inter-bank foreign exchange (forex) market on day.
The US dollar was quoted at BDT 78.70-Tk 78.80 on the day against BDT 78.80 of the previous working day.
Meanwhile, Finance Minister of Bangladesh AHM Mustafa Kamal ruled out any further devaluation of the local currency saying that it would escalate the cost of development projects and discourage foreign direct investment.
The minister also said that there was widespread apprehension that the local currency would be devaluated again to halt the sliding of exports.
Mr. Kamal reportedly said that they would specifically provide incentives to the affected sectors instead of devaluing the local currency as recommended by many, including the country’s exporters.
“The existing appreciating mode of the BDT against the US dollar may continue if the higher inflow of remittances continues in the near future,” a senior treasury official of a leading private commercial bank explained.
He also said the strength of BDT against the US dollar may increase further if the ongoing lower import payment obligations continue in the coming days.
Market indicators suggest that there is no possibility to depreciate the local currency against the US dollar suddenly in a bigger way, the treasury official added.
On the other hand, market insiders predicted that the overall import might increase in the near future following implementation of different infrastructure projects across the country.
Currently, the government is implementing ten priority projects under the supervision of a Fast-Track Project Monitoring Committee, headed by Prime Minister Sheikh Hasina, for ensuring their quick implementation.
BBN/SSR/AD