Dhaka, Bangladesh (BBN)- The central bank purchased nearly US$1.0 billion from the commercial banks until May 17 of this fiscal aiming to keep the inter-bank foreign exchange market stable, officials said.
The Bangladesh Bank (BB), the country’s central bank, has continued its intervention in the inter-bank foreign exchange market through buying the U.S. dollar from the commercial banks despite raising of the net open position (NOP) limit on holding foreign exchange by the commercial banks.
On May 7, 2009, the central bank re-fixed the NOP limit of all commercial banks to US$432 million from $190 million earlier.
“We’ve purchased the U.S. currency from the commercial banks directly to help them comply with the net open position (NOP) rules on holding foreign exchange,” a BB senior official told BBN in Dhaka.
He also said the central bank has continued its intervention in the inter-bank foreign exchange market through selling and buying of the US currency directly besides providing overdraft facilities to the banks for keeping the overall market stable.
As part of the move, the BB purchased $24 million from two commercial banks Sunday on the same ground, the BB officials confirmed.
The central bank of Bangladesh expedited its intervention in the inter-bank foreign exchange market through buying the greenback from the commercial banks directly since January 15, 2009.
The BB bought $535.70 million out of the total $952 million from January to May 17 last, the BB’s data showed.
The central bank officials said the flow of foreign exchange has increased in the market because of fall in import orders recently.
The country’s overall opening of LCs (Letters of Credit) for imports dropped by 10.55 per cent during July-April period of the fiscal 2008-09 against the corresponding period of the previous fiscal.
Import LCs worth $18.016 billion were opened during the period under review as against $20.143 billion of the same period of the previous year, according to the central bank statistics.
BBN/SS/SI/AD-18May09-1:23 am (BST)