Dhaka, Bangladesh (BBN) – The central bank on Monday provided overdraft (OD) facilities for US$25 million more to a state-owned commercial bank (SCB) for settlement of food grains and fertilizer import bills, officials said.

“We’ve provided the SCB such facilities against the government-approved securities instead of reverse repurchase agreement (repo) aiming to keep both money and foreign exchange markets stable,” a senior official of the Bangladesh Bank (BB) told BBN in the capital, Dhaka.

The BB earlier offered such facilities against only reverse repo to settle import payment bills for essential items, including petroleum products.

He also said the central bank will continue to provide such foreign currency support to the commercial banks mainly for making import payments of essential items, including petroleum products, food grains and fertilizer.

Under the move, the BB provided OD facilities for $41 million in the past week to help at least two SCBs clear petroleum import bills for its client, they added.

The central bank continues its intervention in the inter-bank foreign exchange market by selling and buying US dollars directly and providing such short- term facilities to the commercial banks to keep the market stable.

As part of the intervention, the BB bought $9.50 million from the commercial banks recently.

On the other hand, the central bank has started intervening in the market by selling the US currency directly to the commercial banks since October 29, 2007 to keep the market steady.

The central bank has since sold $735 million to the commercial banks as part of its intervention in the market, they confirmed.

BBN/SI/SI/AD-12August08-1:19 AM