Taka up on higher forex inflow

Bangladesh Taka (BDT) appreciated 0.16 per cent against the dollar in July following the higher growth in export earnings alongside a surge in inward remittance flow on the occasion of the Eid-ul-Fitr.

The US dollar was quoted at Tk 77.50-77.52 on the inter-bank foreign-exchange (forex) market on July 31 against Tk 77.63-77.64 on July 2, according to central bank statistics.

Explaining the causes of the Taka appreciation, a senior treasury official of a leading private commercial bank said: "The local currency appreciated against the US currency due mainly to higher growth in export earnings, the less demand for the greenback to settle import payments and the rising trend in inward remittances,"

He also predicted that the existing upward trend of BDT against the dollar might continue until September this year.

"The demand for the US currency may pick up from the month of October 2014 for settling import payments," the treasury official noted while talking to the FE.

The settlement of letters of credit (LCs) against imports historically increases during the October-November period of any calendar year, he explained.

In 2013, the BDT appreciated by more than 2.50 per cent against the US dollar.

The country received $936.63 million in remittance between July 1 and July 18 from Bangladeshi nationals working abroad, the Bangladesh Bank (BB) data showed.

"We expect that the flow of inward remittance may cross $1.35 billion by the end of this month," a BB senior official told the FE correspondent.

However, the central bank has purchased the dollar funds from the commercial banks continuously to keep the forex market stable.

As part of the move, the BB bought $503 million from the commercial banks in July for offsetting its increased supply to the money market.

The central bank purchased a record amount of $5.15 billion from the banks in the fiscal year (FY) 2013-14 on the same ground.

"We've bought the greenback from the banks directly during the period under review to protect the interests of exporters and migrant workers by keeping the exchange rate of the local currency against the US dollar stable," the central banker said to explain the intervention.

He also said the central bank might continue purchasing the dollar in the near future on the basis of market requirement.

The country's foreign-exchange reserves rose to $21.38 billion Thursday from $21.34 billion of the previous day following the dollar purchase.