May 24, 2022
DHAKA – The taka yesterday weakened further against the US dollar amid the falling supply of the greenback due to surging imports.
The latest devaluation came when Bangladesh Bank depreciated the inter-bank exchange rate by Tk 0.40 or 0.45 percent to Tk 87.90 per USD.
The central bank has so far depreciated the taka six times this year.
As the shortage of the greenback has already created an instability in the forex market, the central bank has been trying to bring back discipline by depreciating the local currency, a BB official said.
The banking regulator has also increased the BC (bills for collection) selling rate by Tk 0.40 to Tk 88 a dollar and banks are supposed to follow it while selling dollars to the importers.
But banks are still charging importers more than Tk 95 for a US dollar and Tk 98 for travelers in the open market, said an official of a commercial bank, wishing anonymity, yesterday afternoon.
He blamed it on the rising import payments for the ongoing volatility in the forex market.
The coronavirus pandemic had initially disrupted the supply chain around the world, which subsequently pushed up the commodity prices in the global market.
The Russian invasion of Ukraine has deepened the crisis.
The country’s import payments, which were nearly $5 billion in July last year, stood at over $7 billion in March this year.
Between July and March fiscal 2021-22, import payments escalated to $61.52 billion, up 44 percent year-on-year while exports grew 33 percent to $36.61 billion. This inflicted the highest-ever trade deficit of $24.90 billion on Bangladesh during the period.
The trade deficit caused a fall in reserves to $41.92 billion last week from $46.15 billion on December 31 last year. The reserves had surpassed $48 billion in August.
A BB official said the central bank might depreciate taka more in the days to come given the demand of the greenback in the market.
Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, on Sunday said there was nothing to panic about the current volatility in the foreign exchange market.
He recommended the BB release more US dollars into the market and implement “a drastic depreciation of the local currency” in order to bring back stability.
The BB should have depreciated the taka gradually over the years, but it did not do so fearing inflation, and that’s why a pent-up pressure developed in the market, the noted economist said while giving a lecture organised by The Daily Star at its office in the capital.