Bangladesh Bank has termed the latest appreciation of the local currency against the US dollar a 'right and prudent' move amidst a growing supply of the greenback and its ebbing demand.
"The overall foreign-exchange market is heading towards a positive direction," BB spokesperson Md. Mezbaul Haque told a press briefing on Wednesday, a day after the depreciation of the US dollar by Tk0.50.
As part of government's belt-tightening move, he explained, the BB has been monitoring imports of essential items and services to see whether proper pricing methods are being followed, while discouraging import of non-essential products.
At the same time, significant changes in the interest rates and distortions in the global supply-chain mechanisms were observed closely, he added.
As a result, he said, demand for the US dollar declined significantly in recent months as reflected in the current account that is maintaining a US$1.0-billion surplus at present.
About the financial account, which remains a major challenge for the economy, he said it remained negative right at this moment, but would slowly reach a tolerable level.
He said the country's financial obligations like short-term debt in banks came down to $6.91 billion now from $16.41 billion recorded in 2022. "So, we have cleared payments of around $10 billion and the liabilities are expected to be squeezed to only $49 million by September next year," said Mr. Haque, an executive director of the central bank.
On the supply situation of the greenback on the local money market, he said that timely repatriation of the export proceeds is being considered as another challenge in improving the forex supply, but it keeps improving.
The outstanding overdue bill in 2022 was recorded at $1.50 billion. It came down to $1.0 billion now while remittance inflow is recorded at $1.38 billion so far this month, which was $1.19 billion in the same period of last month, he said.
He added that the possibility of increase in the liabilities is very thin as most of the LCs (letters of credit) are now being settled at sight as the NOP (net open position) of the banks improved significantly in recent months.
Sharing data, the BB spokesman said the volume of NOP was $425.60 million negative until November 20, 2023. By now, it has turned positive and stands at $192.14 million.
At the same time, a total of 31 commercial banks were in the category of long position - the banks have more US dollars than required. "Now the number of such banks has increased to 39, showing a positive sign. We (the BB) think the decision of dollar depreciation now is the right one."
The Bangladesh Foreign Exchange Dealers' Association (BAFEDA) and the Association of Bankers' Bangladesh (ABB) on Wednesday reduced the US dollar exchange rate against local currency by Tk0.50 for remittances, export proceeds, and import payments.
The country witnessed such a cut in exchange rate after more than two years as the previous one took place in August, 2021, according to the BB sources.
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